Correlation Between Compagnie Financire and SoftwareONE Holding

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

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

Diversification Opportunities for Compagnie Financire and SoftwareONE Holding

0.78

Correlation Coefficient

Compagnie Financire  SoftwareONE Holding

Poor diversification

The 3 months correlation between Compagnie and SoftwareONE is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie Financire Richemont and SoftwareONE Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SoftwareONE Holding and Compagnie Financire 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 Compagnie Financire Richemont 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 Compagnie Financire i.e., Compagnie Financire and SoftwareONE Holding go up and down completely randomly.

Pair Corralation between Compagnie Financire and SoftwareONE Holding

Assuming the 90 days trading horizon Compagnie Financire is expected to generate 11.61 times less return on investment than SoftwareONE Holding. But when comparing it to its historical volatility, Compagnie Financire Richemont is 1.71 times less risky than SoftwareONE Holding. It trades about 0.02 of its potential returns per unit of risk. SoftwareONE Holding AG is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  516.00  in SoftwareONE Holding AG on April 23, 2025 and sell it today you would earn a total of  177.00  from holding SoftwareONE Holding AG or generate 34.3% return on investment over 90 days.

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

Compagnie Financire Richemont  vs.  SoftwareONE Holding AG

Compagnie Financire

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie Financire Richemont are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Compagnie Financire is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

SoftwareONE Holding

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SoftwareONE Holding AG are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, SoftwareONE Holding showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Compagnie Financire and SoftwareONE Holding

The main advantage of trading using opposite Compagnie Financire and SoftwareONE Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compagnie Financire 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 Compagnie Financire Richemont and SoftwareONE Holding AG 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 Global Correlations module to find global opportunities by holding instruments from different markets.