Correlation Between Sofina Socit and Fountain

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

By analyzing existing cross correlation between Sofina Socit Anonyme and Fountain, you can compare the effects of market volatilities on Sofina Socit and Fountain 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 Sofina Socit with a short position of Fountain. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sofina Socit and Fountain.

Diversification Opportunities for Sofina Socit and Fountain

0.77

Correlation Coefficient

Sofina Socit  Fountain

Poor diversification

The 3 months correlation between Sofina and Fountain is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Sofina Socit Anonyme and Fountain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fountain and Sofina Socit 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 Sofina Socit Anonyme are associated (or correlated) with Fountain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fountain has no effect on the direction of Sofina Socit i.e., Sofina Socit and Fountain go up and down completely randomly.

Pair Corralation between Sofina Socit and Fountain

Assuming the 90 days trading horizon Sofina Socit is expected to generate 6.28 times less return on investment than Fountain. But when comparing it to its historical volatility, Sofina Socit Anonyme is 4.65 times less risky than Fountain. It trades about 0.01 of its potential returns per unit of risk. Fountain is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  129.00  in Fountain on September 20, 2024 and sell it today you would lose (2.00) from holding Fountain or give up 1.55% of portfolio value over 90 days.

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

Sofina Socit Anonyme  vs.  Fountain

Sofina Socit Anonyme

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sofina Socit Anonyme has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Fountain

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fountain has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Sofina Socit and Fountain

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

The idea behind Sofina Socit Anonyme and Fountain 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.