Correlation Between Solvay SA and Ontex Group

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

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

Diversification Opportunities for Solvay SA and Ontex Group

0.55

Correlation Coefficient

Solvay SA  Ontex Group

Very weak diversification

The 3 months correlation between Solvay and Ontex is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Solvay SA and Ontex Group NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ontex Group NV and Solvay 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 Solvay SA are associated (or correlated) with Ontex Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ontex Group NV has no effect on the direction of Solvay SA i.e., Solvay SA and Ontex Group go up and down completely randomly.

Pair Corralation between Solvay SA and Ontex Group

Assuming the 90 days trading horizon Solvay SA is expected to under-perform the Ontex Group. In addition to that, Solvay SA is 1.28 times more volatile than Ontex Group NV. It trades about -0.07 of its total potential returns per unit of risk. Ontex Group NV is currently generating about -0.07 per unit of volatility. If you would invest  883.00  in Ontex Group NV on September 19, 2024 and sell it today you would lose (63.00) from holding Ontex Group NV or give up 7.13% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Solvay SA  vs.  Ontex Group NV

Solvay SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Solvay SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Ontex Group NV

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Solvay SA and Ontex Group

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

The idea behind Solvay SA and Ontex Group 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.