Correlation Between Softimat and Nyrstar NV

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

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

Diversification Opportunities for Softimat and Nyrstar NV

-0.58

Correlation Coefficient

Softimat  Nyrstar NV

Excellent diversification

The 3 months correlation between Softimat and Nyrstar is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Softimat SA and Nyrstar NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nyrstar NV and Softimat 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 Softimat SA are associated (or correlated) with Nyrstar NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nyrstar NV has no effect on the direction of Softimat i.e., Softimat and Nyrstar NV go up and down completely randomly.

Pair Corralation between Softimat and Nyrstar NV

Assuming the 90 days trading horizon Softimat SA is expected to under-perform the Nyrstar NV. But the stock apears to be less risky and, when comparing its historical volatility, Softimat SA is 4.24 times less risky than Nyrstar NV. The stock trades about -0.02 of its potential returns per unit of risk. The Nyrstar NV is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  4.00  in Nyrstar NV on September 23, 2024 and sell it today you would earn a total of  3.28  from holding Nyrstar NV or generate 82.0% return on investment over 90 days.

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

Softimat SA  vs.  Nyrstar NV

Softimat SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Softimat SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Softimat is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Nyrstar NV

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nyrstar NV are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Nyrstar NV reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Softimat and Nyrstar NV

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

The idea behind Softimat SA and Nyrstar NV 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.