Correlation Between Widepoint and Sonasoft Corp

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

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

Diversification Opportunities for Widepoint and Sonasoft Corp

-0.75

Correlation Coefficient

Widepoint  Sonasoft Corp

Pay attention - limited upside

The 3 months correlation between Widepoint and Sonasoft is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Widepoint C and Sonasoft Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonasoft Corp and Widepoint 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 Widepoint C are associated (or correlated) with Sonasoft Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sonasoft Corp has no effect on the direction of Widepoint i.e., Widepoint and Sonasoft Corp go up and down completely randomly.

Pair Corralation between Widepoint and Sonasoft Corp

Considering the 90-day investment horizon Widepoint is expected to generate 8.63 times less return on investment than Sonasoft Corp. But when comparing it to its historical volatility, Widepoint C is 8.16 times less risky than Sonasoft Corp. It trades about 0.07 of its potential returns per unit of risk. Sonasoft Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2.51  in Sonasoft Corp on September 3, 2024 and sell it today you would lose (2.33) from holding Sonasoft Corp or give up 92.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	24.85%
Values	Daily Returns

Widepoint C  vs.  Sonasoft Corp

Widepoint C

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Widepoint C are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Widepoint showed solid returns over the last few months and may actually be approaching a breakup point.

Sonasoft Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sonasoft Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Sonasoft Corp is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Widepoint and Sonasoft Corp

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

The idea behind Widepoint C and Sonasoft Corp 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.