Correlation Between Aspo Oyj and Solteq PLC
Can any of the company-specific risk be diversified away by investing in both Aspo Oyj and Solteq PLC 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 Aspo Oyj and Solteq PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aspo Oyj and Solteq PLC, you can compare the effects of market volatilities on Aspo Oyj and Solteq PLC 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 Aspo Oyj with a short position of Solteq PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aspo Oyj and Solteq PLC.
Diversification Opportunities for Aspo Oyj and Solteq PLC
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Aspo and Solteq is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Aspo Oyj and Solteq PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solteq PLC and Aspo Oyj 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 Aspo Oyj are associated (or correlated) with Solteq PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solteq PLC has no effect on the direction of Aspo Oyj i.e., Aspo Oyj and Solteq PLC go up and down completely randomly.
Pair Corralation between Aspo Oyj and Solteq PLC
Assuming the 90 days trading horizon Aspo Oyj is expected to under-perform the Solteq PLC. But the stock apears to be less risky and, when comparing its historical volatility, Aspo Oyj is 3.63 times less risky than Solteq PLC. The stock trades about -0.59 of its potential returns per unit of risk. The Solteq PLC is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 61.00 in Solteq PLC on August 27, 2024 and sell it today you would earn a total of 1.00 from holding Solteq PLC or generate 1.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aspo Oyj vs. Solteq PLC
Performance |
| Timeline |
| Aspo Oyj |
| Solteq PLC |
Aspo Oyj and Solteq PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aspo Oyj and Solteq PLC
The main advantage of trading using opposite Aspo Oyj and Solteq PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aspo Oyj position performs unexpectedly, Solteq PLC 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 Solteq PLC will offset losses from the drop in Solteq PLC's long position.| Aspo Oyj vs. Tokmanni Group Oyj | Aspo Oyj vs. Kemira Oyj | Aspo Oyj vs. TietoEVRY Corp | Aspo Oyj vs. CapMan Oyj B |
| Solteq PLC vs. CapMan Oyj B | Solteq PLC vs. HKFoods Oyj A | Solteq PLC vs. KONE Oyj | Solteq PLC vs. Exel Composites Oyj |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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