Correlation Between Sodexo SA and GL Events

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

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

Diversification Opportunities for Sodexo SA and GL Events

-0.57

Correlation Coefficient

Sodexo SA  GL Events

Excellent diversification

The 3 months correlation between Sodexo and GLO is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Sodexo SA and GL Events SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GL Events SA and Sodexo SA 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 Sodexo SA are associated (or correlated) with GL Events. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GL Events SA has no effect on the direction of Sodexo SA i.e., Sodexo SA and GL Events go up and down completely randomly.

Pair Corralation between Sodexo SA and GL Events

Assuming the 90 days horizon Sodexo SA is expected to under-perform the GL Events. But the stock apears to be less risky and, when comparing its historical volatility, Sodexo SA is 1.3 times less risky than GL Events. The stock trades about -0.07 of its potential returns per unit of risk. The GL Events SA is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  2,089  in GL Events SA on April 24, 2025 and sell it today you would earn a total of  646.00  from holding GL Events SA or generate 30.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Sodexo SA  vs.  GL Events SA

Sodexo SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sodexo SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Sodexo SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

GL Events SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in GL Events SA are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, GL Events sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sodexo SA and GL Events

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

The idea behind Sodexo SA and GL Events 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.