Correlation Between Tessenderlo and Solvac SA

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

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

Diversification Opportunities for Tessenderlo and Solvac SA

0.03

Correlation Coefficient

Tessenderlo  Solvac SA

Significant diversification

The 3 months correlation between Tessenderlo and Solvac is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Tessenderlo and Solvac SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solvac SA and Tessenderlo 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 Tessenderlo are associated (or correlated) with Solvac SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solvac SA has no effect on the direction of Tessenderlo i.e., Tessenderlo and Solvac SA go up and down completely randomly.

Pair Corralation between Tessenderlo and Solvac SA

Assuming the 90 days trading horizon Tessenderlo is expected to under-perform the Solvac SA. But the stock apears to be less risky and, when comparing its historical volatility, Tessenderlo is 1.02 times less risky than Solvac SA. The stock trades about -0.13 of its potential returns per unit of risk. The Solvac SA is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  9,800  in Solvac SA on September 14, 2024 and sell it today you would earn a total of  650.00  from holding Solvac SA or generate 6.63% return on investment over 90 days.

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

Tessenderlo  vs.  Solvac SA

Tessenderlo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tessenderlo 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.

Solvac SA

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Solvac SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Solvac SA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Tessenderlo and Solvac SA

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

The idea behind Tessenderlo and Solvac SA 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.