Correlation Between SolTech Energy and Eolus Vind
Can any of the company-specific risk be diversified away by investing in both SolTech Energy and Eolus Vind 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 SolTech Energy and Eolus Vind into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SolTech Energy Sweden and Eolus Vind AB, you can compare the effects of market volatilities on SolTech Energy and Eolus Vind 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 SolTech Energy with a short position of Eolus Vind. Check out your portfolio center. Please also check ongoing floating volatility patterns of SolTech Energy and Eolus Vind.
Diversification Opportunities for SolTech Energy and Eolus Vind
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SolTech and Eolus is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding SolTech Energy Sweden and Eolus Vind AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eolus Vind AB and SolTech Energy 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 SolTech Energy Sweden are associated (or correlated) with Eolus Vind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eolus Vind AB has no effect on the direction of SolTech Energy i.e., SolTech Energy and Eolus Vind go up and down completely randomly.
Pair Corralation between SolTech Energy and Eolus Vind
Assuming the 90 days trading horizon SolTech Energy Sweden is expected to under-perform the Eolus Vind. In addition to that, SolTech Energy is 1.55 times more volatile than Eolus Vind AB. It trades about -0.15 of its total potential returns per unit of risk. Eolus Vind AB is currently generating about -0.19 per unit of volatility. If you would invest 8,080 in Eolus Vind AB on August 29, 2024 and sell it today you would lose (3,605) from holding Eolus Vind AB or give up 44.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SolTech Energy Sweden vs. Eolus Vind AB
Performance |
| Timeline |
| SolTech Energy Sweden |
| Eolus Vind AB |
SolTech Energy and Eolus Vind Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SolTech Energy and Eolus Vind
The main advantage of trading using opposite SolTech Energy and Eolus Vind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SolTech Energy position performs unexpectedly, Eolus Vind 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 Eolus Vind will offset losses from the drop in Eolus Vind's long position.| SolTech Energy vs. Eolus Vind AB | SolTech Energy vs. Sinch AB | SolTech Energy vs. Embracer Group AB | SolTech Energy vs. Powercell Sweden |
| Eolus Vind vs. NOTE AB | Eolus Vind vs. Zaptec AS | Eolus Vind vs. SolTech Energy Sweden | Eolus Vind vs. Scatec Solar OL |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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