Correlation Between Norva24 Group and SolTech Energy
Can any of the company-specific risk be diversified away by investing in both Norva24 Group and SolTech Energy 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 Norva24 Group and SolTech Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Norva24 Group AB and SolTech Energy Sweden, you can compare the effects of market volatilities on Norva24 Group and SolTech Energy 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 Norva24 Group with a short position of SolTech Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norva24 Group and SolTech Energy.
Diversification Opportunities for Norva24 Group and SolTech Energy
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Norva24 and SolTech is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Norva24 Group AB and SolTech Energy Sweden in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SolTech Energy Sweden and Norva24 Group 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 Norva24 Group AB are associated (or correlated) with SolTech Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SolTech Energy Sweden has no effect on the direction of Norva24 Group i.e., Norva24 Group and SolTech Energy go up and down completely randomly.
Pair Corralation between Norva24 Group and SolTech Energy
Assuming the 90 days trading horizon Norva24 Group AB is expected to generate 0.56 times more return on investment than SolTech Energy. However, Norva24 Group AB is 1.78 times less risky than SolTech Energy. It trades about -0.14 of its potential returns per unit of risk. SolTech Energy Sweden is currently generating about -0.23 per unit of risk. If you would invest 3,120 in Norva24 Group AB on September 2, 2024 and sell it today you would lose (250.00) from holding Norva24 Group AB or give up 8.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Norva24 Group AB vs. SolTech Energy Sweden
Performance |
| Timeline |
| Norva24 Group AB |
| SolTech Energy Sweden |
Norva24 Group and SolTech Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norva24 Group and SolTech Energy
The main advantage of trading using opposite Norva24 Group and SolTech Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norva24 Group position performs unexpectedly, SolTech Energy 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 SolTech Energy will offset losses from the drop in SolTech Energy's long position.| Norva24 Group vs. Minesto AB | Norva24 Group vs. Sivers IMA Holding | Norva24 Group vs. SolTech Energy Sweden | Norva24 Group vs. AAC Clyde Space |
| SolTech Energy vs. Eolus Vind AB | SolTech Energy vs. Sinch AB | SolTech Energy vs. Embracer Group AB | SolTech Energy vs. Powercell Sweden |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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