Correlation Between SohuCom and Criteo Sa
Can any of the company-specific risk be diversified away by investing in both SohuCom and Criteo 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 SohuCom and Criteo Sa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SohuCom and Criteo Sa, you can compare the effects of market volatilities on SohuCom and Criteo 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 SohuCom with a short position of Criteo Sa. Check out your portfolio center. Please also check ongoing floating volatility patterns of SohuCom and Criteo Sa.
Diversification Opportunities for SohuCom and Criteo Sa
Very weak diversification
The 3 months correlation between SohuCom and Criteo is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding SohuCom and Criteo Sa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Criteo Sa and SohuCom 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 SohuCom are associated (or correlated) with Criteo Sa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Criteo Sa has no effect on the direction of SohuCom i.e., SohuCom and Criteo Sa go up and down completely randomly.
Pair Corralation between SohuCom and Criteo Sa
Given the investment horizon of 90 days SohuCom is expected to under-perform the Criteo Sa. In addition to that, SohuCom is 1.11 times more volatile than Criteo Sa. It trades about -0.01 of its total potential returns per unit of risk. Criteo Sa is currently generating about 0.04 per unit of volatility. If you would invest 2,593 in Criteo Sa on January 26, 2024 and sell it today you would earn a total of 1,103 from holding Criteo Sa or generate 42.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SohuCom vs. Criteo Sa
Performance |
| Timeline |
| SohuCom |
| Criteo Sa |
SohuCom and Criteo Sa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SohuCom and Criteo Sa
The main advantage of trading using opposite SohuCom and Criteo Sa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SohuCom position performs unexpectedly, Criteo 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 Criteo Sa will offset losses from the drop in Criteo Sa's long position.The idea behind SohuCom and Criteo 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.Check out your portfolio center.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 AI Investment Finder module to use AI to screen and filter profitable investment opportunities.
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