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 AG, 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

-0.37

Correlation Coefficient

Stadler Rail  SoftwareONE Holding

Very good diversification

The 3 months correlation between Stadler and SoftwareONE is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Stadler Rail AG and SoftwareONE Holding AG 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 is expected to generate 11.84 times less return on investment than SoftwareONE Holding. But when comparing it to its historical volatility, Stadler Rail AG is 2.06 times less risky than SoftwareONE Holding. It trades about 0.03 of its potential returns per unit of risk. SoftwareONE Holding AG is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  499.00  in SoftwareONE Holding AG on April 21, 2025 and sell it today you would earn a total of  194.00  from holding SoftwareONE Holding AG or generate 38.88% return on investment over 90 days.

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

Stadler Rail AG  vs.  SoftwareONE Holding AG

Stadler Rail AG

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Stadler Rail AG are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Stadler Rail is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private 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 14 (%) 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 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 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.