Correlation Between SolTech Energy and Lohilo Foods
Can any of the company-specific risk be diversified away by investing in both SolTech Energy and Lohilo Foods 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 Lohilo Foods 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 Lohilo Foods AB, you can compare the effects of market volatilities on SolTech Energy and Lohilo Foods 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 Lohilo Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of SolTech Energy and Lohilo Foods.
Diversification Opportunities for SolTech Energy and Lohilo Foods
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SolTech and Lohilo is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding SolTech Energy Sweden and Lohilo Foods AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lohilo Foods 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 Lohilo Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lohilo Foods AB has no effect on the direction of SolTech Energy i.e., SolTech Energy and Lohilo Foods go up and down completely randomly.
Pair Corralation between SolTech Energy and Lohilo Foods
Assuming the 90 days trading horizon SolTech Energy Sweden is expected to under-perform the Lohilo Foods. But the stock apears to be less risky and, when comparing its historical volatility, SolTech Energy Sweden is 1.02 times less risky than Lohilo Foods. The stock trades about -0.13 of its potential returns per unit of risk. The Lohilo Foods AB is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 189.00 in Lohilo Foods AB on September 12, 2024 and sell it today you would lose (46.00) from holding Lohilo Foods AB or give up 24.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SolTech Energy Sweden vs. Lohilo Foods AB
Performance |
| Timeline |
| SolTech Energy Sweden |
| Lohilo Foods AB |
SolTech Energy and Lohilo Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SolTech Energy and Lohilo Foods
The main advantage of trading using opposite SolTech Energy and Lohilo Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SolTech Energy position performs unexpectedly, Lohilo Foods 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 Lohilo Foods will offset losses from the drop in Lohilo Foods' long position.| SolTech Energy vs. Sinch AB | SolTech Energy vs. Embracer Group AB | SolTech Energy vs. Powercell Sweden | SolTech Energy vs. KABE Group AB |
| Lohilo Foods vs. Smart Eye AB | Lohilo Foods vs. Kamux Suomi Oy | Lohilo Foods vs. Zignsec AB | Lohilo Foods vs. Harvia Oyj |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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