Correlation Between Soditech and Trigano SA

Can any of the company-specific risk be diversified away by investing in both Soditech and Trigano SA at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Soditech and Trigano SA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Soditech SA and Trigano SA, you can compare the effects of market volatilities on Soditech and Trigano SA and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Soditech with a short position of Trigano SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Soditech and Trigano SA.

Diversification Opportunities for Soditech and Trigano SA

-0.03

Correlation Coefficient

Soditech  Trigano SA

Good diversification

The 3 months correlation between Soditech and Trigano is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Soditech SA and Trigano SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trigano SA and Soditech is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Soditech SA are associated (or correlated) with Trigano SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trigano SA has no effect on the direction of Soditech i.e., Soditech and Trigano SA go up and down completely randomly.

Pair Corralation between Soditech and Trigano SA

Assuming the 90 days trading horizon Soditech is expected to generate 2.55 times less return on investment than Trigano SA. In addition to that, Soditech is 2.75 times more volatile than Trigano SA. It trades about 0.02 of its total potential returns per unit of risk. Trigano SA is currently generating about 0.12 per unit of volatility. If you would invest  11,540  in Trigano SA on September 13, 2024 and sell it today you would earn a total of  940.00  from holding Trigano SA or generate 8.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Soditech SA  vs.  Trigano SA

Soditech SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Soditech SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Soditech is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Trigano SA

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Trigano SA are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, Trigano SA sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Soditech and Trigano SA

The main advantage of trading using opposite Soditech and Trigano SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Soditech position performs unexpectedly, Trigano SA can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Trigano SA will offset losses from the drop in Trigano SA's long position.

The idea behind Soditech SA and Trigano SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.