Correlation Between Soitec SA and Adocia

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

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

Diversification Opportunities for Soitec SA and Adocia

-0.74

Correlation Coefficient

Soitec SA  Adocia

Pay attention - limited upside

The 3 months correlation between Soitec and Adocia is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Soitec SA and Adocia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adocia and Soitec SA 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 Soitec SA are associated (or correlated) with Adocia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adocia has no effect on the direction of Soitec SA i.e., Soitec SA and Adocia go up and down completely randomly.

Pair Corralation between Soitec SA and Adocia

Assuming the 90 days trading horizon Soitec SA is expected to generate 0.94 times more return on investment than Adocia. However, Soitec SA is 1.06 times less risky than Adocia. It trades about 0.19 of its potential returns per unit of risk. Adocia is currently generating about -0.16 per unit of risk. If you would invest  7,020  in Soitec SA on September 12, 2024 and sell it today you would earn a total of  1,555  from holding Soitec SA or generate 22.15% return on investment over 90 days.

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

Soitec SA  vs.  Adocia

Soitec SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Soitec SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Adocia

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Adocia are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Adocia sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Soitec SA and Adocia

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

The idea behind Soitec SA and Adocia 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..