Correlation Between Solar AS and Flgger Group

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Can any of the company-specific risk be diversified away by investing in both Solar AS and Flgger Group 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 Solar AS and Flgger Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solar AS and Flgger group AS, you can compare the effects of market volatilities on Solar AS and Flgger Group 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 Solar AS with a short position of Flgger Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solar AS and Flgger Group.

Diversification Opportunities for Solar AS and Flgger Group

0.14
  Correlation Coefficient

Average diversification

The 3 months correlation between Solar and Flgger is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Solar AS and Flgger group AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flgger group AS and Solar AS 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 Solar AS are associated (or correlated) with Flgger Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flgger group AS has no effect on the direction of Solar AS i.e., Solar AS and Flgger Group go up and down completely randomly.

Pair Corralation between Solar AS and Flgger Group

Assuming the 90 days trading horizon Solar AS is expected to under-perform the Flgger Group. In addition to that, Solar AS is 1.69 times more volatile than Flgger group AS. It trades about -0.02 of its total potential returns per unit of risk. Flgger group AS is currently generating about 0.08 per unit of volatility. If you would invest  32,400  in Flgger group AS on November 2, 2024 and sell it today you would earn a total of  1,400  from holding Flgger group AS or generate 4.32% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy98.33%
ValuesDaily Returns

Solar AS  vs.  Flgger group AS

 Performance 
       Timeline  
Solar AS 

Risk-Adjusted Performance

0 of 100

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

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Flgger group AS are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Flgger Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Solar AS and Flgger Group Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Solar AS and Flgger Group

The main advantage of trading using opposite Solar AS and Flgger Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solar AS position performs unexpectedly, Flgger Group 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 Flgger Group will offset losses from the drop in Flgger Group's long position.
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The idea behind Solar AS and Flgger group AS 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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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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.

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