Correlation Between Sodexo SA and IDS France

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

By analyzing existing cross correlation between Sodexo SA and IDS France SAS, you can compare the effects of market volatilities on Sodexo SA and IDS France 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 IDS France. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sodexo SA and IDS France.

Diversification Opportunities for Sodexo SA and IDS France

-0.64

Correlation Coefficient

Sodexo SA  IDS France

Excellent diversification

The 3 months correlation between Sodexo and IDS is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Sodexo SA and IDS France SAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IDS France SAS 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 IDS France. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IDS France SAS has no effect on the direction of Sodexo SA i.e., Sodexo SA and IDS France go up and down completely randomly.

Pair Corralation between Sodexo SA and IDS France

Assuming the 90 days horizon Sodexo SA is expected to under-perform the IDS France. But the stock apears to be less risky and, when comparing its historical volatility, Sodexo SA is 3.56 times less risky than IDS France. The stock trades about -0.07 of its potential returns per unit of risk. The IDS France SAS is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  30.00  in IDS France SAS on April 24, 2025 and sell it today you would earn a total of  19.00  from holding IDS France SAS or generate 63.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.83%
Values	Daily Returns

Sodexo SA  vs.  IDS France SAS

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.

IDS France SAS

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in IDS France SAS are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, IDS France reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sodexo SA and IDS France

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

The idea behind Sodexo SA and IDS France SAS 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.