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
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between SolTech and Midsummer is 0.1. 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. But the stock apears to be less risky and, when comparing its historical volatility, SolTech Energy Sweden is 1.2 times less risky than Midsummer. The stock trades about -0.15 of its potential returns per unit of risk. The Midsummer AB is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 201.00 in Midsummer AB on September 3, 2024 and sell it today you would lose (69.00) from holding Midsummer AB or give up 34.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| 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. Soder Sportfiske AB | Midsummer vs. USWE Sports AB | Midsummer vs. Lime Technologies AB | Midsummer vs. SolTech Energy Sweden |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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