Correlation Between SolTech Energy and Impact Coatings
Can any of the company-specific risk be diversified away by investing in both SolTech Energy and Impact Coatings 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 Impact Coatings 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 Impact Coatings publ, you can compare the effects of market volatilities on SolTech Energy and Impact Coatings 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 Impact Coatings. Check out your portfolio center. Please also check ongoing floating volatility patterns of SolTech Energy and Impact Coatings.
Diversification Opportunities for SolTech Energy and Impact Coatings
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SolTech and Impact is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding SolTech Energy Sweden and Impact Coatings publ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Impact Coatings publ 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 Impact Coatings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Impact Coatings publ has no effect on the direction of SolTech Energy i.e., SolTech Energy and Impact Coatings go up and down completely randomly.
Pair Corralation between SolTech Energy and Impact Coatings
Assuming the 90 days trading horizon SolTech Energy Sweden is expected to under-perform the Impact Coatings. But the stock apears to be less risky and, when comparing its historical volatility, SolTech Energy Sweden is 1.05 times less risky than Impact Coatings. The stock trades about -0.29 of its potential returns per unit of risk. The Impact Coatings publ is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 409.00 in Impact Coatings publ on August 26, 2024 and sell it today you would earn a total of 29.00 from holding Impact Coatings publ or generate 7.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SolTech Energy Sweden vs. Impact Coatings publ
Performance |
| Timeline |
| SolTech Energy Sweden |
| Impact Coatings publ |
SolTech Energy and Impact Coatings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SolTech Energy and Impact Coatings
The main advantage of trading using opposite SolTech Energy and Impact Coatings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SolTech Energy position performs unexpectedly, Impact Coatings 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 Impact Coatings will offset losses from the drop in Impact Coatings' long position.| SolTech Energy vs. Eolus Vind AB | SolTech Energy vs. Sinch AB | SolTech Energy vs. Embracer Group AB | SolTech Energy vs. Powercell Sweden |
| Impact Coatings vs. Addtech AB | Impact Coatings vs. Teqnion AB | Impact Coatings vs. Vitec Software Group | Impact Coatings vs. Lagercrantz Group AB |
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 CEOs Directory module to screen CEOs from public companies around the world.
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