Correlation Between Investment and SolTech Energy
Can any of the company-specific risk be diversified away by investing in both Investment 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 Investment and SolTech Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Investment AB Oresund and SolTech Energy Sweden, you can compare the effects of market volatilities on Investment 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 Investment with a short position of SolTech Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investment and SolTech Energy.
Diversification Opportunities for Investment and SolTech Energy
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Investment and SolTech is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Investment AB Oresund 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 Investment 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 Investment AB Oresund 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 Investment i.e., Investment and SolTech Energy go up and down completely randomly.
Pair Corralation between Investment and SolTech Energy
Assuming the 90 days trading horizon Investment AB Oresund is expected to generate 0.36 times more return on investment than SolTech Energy. However, Investment AB Oresund is 2.78 times less risky than SolTech Energy. It trades about 0.03 of its potential returns per unit of risk. SolTech Energy Sweden is currently generating about -0.09 per unit of risk. If you would invest 9,839 in Investment AB Oresund on September 1, 2024 and sell it today you would earn a total of 1,321 from holding Investment AB Oresund or generate 13.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Investment AB Oresund vs. SolTech Energy Sweden
Performance |
| Timeline |
| Investment AB Oresund |
| SolTech Energy Sweden |
Investment and SolTech Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Investment and SolTech Energy
The main advantage of trading using opposite Investment and SolTech Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investment 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.| Investment vs. Bure Equity AB | Investment vs. Creades AB | Investment vs. L E Lundbergfretagen | Investment vs. Industrivarden AB ser |
| 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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