Correlation Between Stadler Rail and Softwareone Holding

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

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

Diversification Opportunities for Stadler Rail and Softwareone Holding

0.79

Correlation Coefficient

Stadler Rail  Softwareone Holding

Poor diversification

The 3 months correlation between Stadler and Softwareone is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Stadler Rail AG and Softwareone Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Softwareone Holding and Stadler Rail 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 Stadler Rail AG are associated (or correlated) with Softwareone Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Softwareone Holding has no effect on the direction of Stadler Rail i.e., Stadler Rail and Softwareone Holding go up and down completely randomly.

Pair Corralation between Stadler Rail and Softwareone Holding

Assuming the 90 days trading horizon Stadler Rail AG is expected to generate 0.34 times more return on investment than Softwareone Holding. However, Stadler Rail AG is 2.98 times less risky than Softwareone Holding. It trades about -0.17 of its potential returns per unit of risk. Softwareone Holding is currently generating about -0.19 per unit of risk. If you would invest  2,515  in Stadler Rail AG on September 15, 2024 and sell it today you would lose (510.00) from holding Stadler Rail AG or give up 20.28% of portfolio value over 90 days.

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

Stadler Rail AG  vs.  Softwareone Holding

Stadler Rail AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stadler Rail AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Softwareone Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Softwareone Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Stadler Rail and Softwareone Holding

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

The idea behind Stadler Rail AG and Softwareone Holding 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.