Correlation Between SIG Combibloc and Softwareone Holding

Can any of the company-specific risk be diversified away by investing in both SIG Combibloc and Softwareone Holding 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 SIG Combibloc and Softwareone Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SIG Combibloc Group and Softwareone Holding, you can compare the effects of market volatilities on SIG Combibloc and Softwareone Holding 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 SIG Combibloc with a short position of Softwareone Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIG Combibloc and Softwareone Holding.

Diversification Opportunities for SIG Combibloc and Softwareone Holding

0.15

Correlation Coefficient

SIG Combibloc  Softwareone Holding

Average diversification

The 3 months correlation between SIG and Softwareone is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding SIG Combibloc Group and Softwareone Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Softwareone Holding and SIG Combibloc 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 SIG Combibloc Group are associated (or correlated) with Softwareone Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Softwareone Holding has no effect on the direction of SIG Combibloc i.e., SIG Combibloc and Softwareone Holding go up and down completely randomly.

Pair Corralation between SIG Combibloc and Softwareone Holding

Assuming the 90 days trading horizon SIG Combibloc Group is expected to generate 0.3 times more return on investment than Softwareone Holding. However, SIG Combibloc Group is 3.38 times less risky than Softwareone Holding. It trades about 0.08 of its potential returns per unit of risk. Softwareone Holding is currently generating about -0.19 per unit of risk. If you would invest  1,653  in SIG Combibloc Group on September 15, 2024 and sell it today you would earn a total of  134.00  from holding SIG Combibloc Group or generate 8.11% return on investment over 90 days.

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

SIG Combibloc Group  vs.  Softwareone Holding

SIG Combibloc Group

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SIG Combibloc Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, SIG Combibloc may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Softwareone Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Softwareone Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with SIG Combibloc and Softwareone Holding

The main advantage of trading using opposite SIG Combibloc and Softwareone Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIG Combibloc position performs unexpectedly, Softwareone Holding 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 Softwareone Holding will offset losses from the drop in Softwareone Holding's long position.

The idea behind SIG Combibloc Group and Softwareone Holding 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.