Correlation Between SoftOx Solutions and Induct AS

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

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

Diversification Opportunities for SoftOx Solutions and Induct AS

0.26

Correlation Coefficient

SoftOx Solutions  Induct AS

Modest diversification

The 3 months correlation between SoftOx and Induct is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding SoftOx Solutions AS and Induct AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Induct AS and SoftOx Solutions 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 SoftOx Solutions AS are associated (or correlated) with Induct AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Induct AS has no effect on the direction of SoftOx Solutions i.e., SoftOx Solutions and Induct AS go up and down completely randomly.

Pair Corralation between SoftOx Solutions and Induct AS

Assuming the 90 days trading horizon SoftOx Solutions AS is expected to under-perform the Induct AS. In addition to that, SoftOx Solutions is 1.07 times more volatile than Induct AS. It trades about -0.01 of its total potential returns per unit of risk. Induct AS is currently generating about 0.03 per unit of volatility. If you would invest  206.00  in Induct AS on September 16, 2024 and sell it today you would lose (11.00) from holding Induct AS or give up 5.34% of portfolio value over 90 days.

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

SoftOx Solutions AS  vs.  Induct AS

SoftOx Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SoftOx Solutions AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, SoftOx Solutions is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Induct AS

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Induct AS are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Induct AS may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with SoftOx Solutions and Induct AS

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

The idea behind SoftOx Solutions AS and Induct AS 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.