Correlation Between SolTech Energy and Minesto AB
Can any of the company-specific risk be diversified away by investing in both SolTech Energy and Minesto AB 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 Minesto AB 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 Minesto AB, you can compare the effects of market volatilities on SolTech Energy and Minesto AB 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 Minesto AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of SolTech Energy and Minesto AB.
Diversification Opportunities for SolTech Energy and Minesto AB
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between SolTech and Minesto is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding SolTech Energy Sweden and Minesto AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Minesto 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 Minesto AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Minesto AB has no effect on the direction of SolTech Energy i.e., SolTech Energy and Minesto AB go up and down completely randomly.
Pair Corralation between SolTech Energy and Minesto AB
Assuming the 90 days trading horizon SolTech Energy Sweden is expected to under-perform the Minesto AB. In addition to that, SolTech Energy is 1.17 times more volatile than Minesto AB. It trades about -0.29 of its total potential returns per unit of risk. Minesto AB is currently generating about -0.33 per unit of volatility. If you would invest 324.00 in Minesto AB on August 26, 2024 and sell it today you would lose (80.00) from holding Minesto AB or give up 24.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SolTech Energy Sweden vs. Minesto AB
Performance |
| Timeline |
| SolTech Energy Sweden |
| Minesto AB |
SolTech Energy and Minesto AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SolTech Energy and Minesto AB
The main advantage of trading using opposite SolTech Energy and Minesto AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SolTech Energy position performs unexpectedly, Minesto AB 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 Minesto AB will offset losses from the drop in Minesto AB'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 |
| Minesto AB vs. SolTech Energy Sweden | Minesto AB vs. Eolus Vind AB | Minesto AB vs. Climeon AB | Minesto AB vs. Powercell 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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