Correlation Between SolTech Energy and Midsummer
Can any of the company-specific risk be diversified away by investing in both SolTech Energy and Midsummer 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 Midsummer 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 Midsummer AB, you can compare the effects of market volatilities on SolTech Energy and Midsummer 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 Midsummer. Check out your portfolio center. Please also check ongoing floating volatility patterns of SolTech Energy and Midsummer.
Diversification Opportunities for SolTech Energy and Midsummer
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SolTech and Midsummer is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding SolTech Energy Sweden and Midsummer AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Midsummer 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 Midsummer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Midsummer AB has no effect on the direction of SolTech Energy i.e., SolTech Energy and Midsummer go up and down completely randomly.
Pair Corralation between SolTech Energy and Midsummer
Assuming the 90 days trading horizon SolTech Energy Sweden is expected to under-perform the Midsummer. In addition to that, SolTech Energy is 1.11 times more volatile than Midsummer AB. It trades about -0.07 of its total potential returns per unit of risk. Midsummer AB is currently generating about 0.1 per unit of volatility. If you would invest 107.00 in Midsummer AB on November 5, 2024 and sell it today you would earn a total of 5.00 from holding Midsummer AB or generate 4.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SolTech Energy Sweden vs. Midsummer AB
Performance |
| Timeline |
| SolTech Energy Sweden |
| Midsummer AB |
SolTech Energy and Midsummer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SolTech Energy and Midsummer
The main advantage of trading using opposite SolTech Energy and Midsummer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SolTech Energy position performs unexpectedly, Midsummer 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 Midsummer will offset losses from the drop in Midsummer'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 |
| Midsummer vs. SolTech Energy Sweden | Midsummer vs. Mekonomen AB | Midsummer vs. Embellence Group AB | Midsummer vs. AAC Clyde Space |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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