Correlation Between SolTech Energy and Peab AB
Can any of the company-specific risk be diversified away by investing in both SolTech Energy and Peab 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 Peab 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 Peab AB, you can compare the effects of market volatilities on SolTech Energy and Peab 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 Peab AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of SolTech Energy and Peab AB.
Diversification Opportunities for SolTech Energy and Peab AB
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SolTech and Peab is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding SolTech Energy Sweden and Peab AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peab 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 Peab AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peab AB has no effect on the direction of SolTech Energy i.e., SolTech Energy and Peab AB go up and down completely randomly.
Pair Corralation between SolTech Energy and Peab AB
Assuming the 90 days trading horizon SolTech Energy Sweden is expected to under-perform the Peab AB. In addition to that, SolTech Energy is 1.95 times more volatile than Peab AB. It trades about -0.22 of its total potential returns per unit of risk. Peab AB is currently generating about -0.01 per unit of volatility. If you would invest 8,140 in Peab AB on August 30, 2024 and sell it today you would lose (110.00) from holding Peab AB or give up 1.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.73% |
| Values | Daily Returns |
SolTech Energy Sweden vs. Peab AB
Performance |
| Timeline |
| SolTech Energy Sweden |
| Peab AB |
SolTech Energy and Peab AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SolTech Energy and Peab AB
The main advantage of trading using opposite SolTech Energy and Peab AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SolTech Energy position performs unexpectedly, Peab 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 Peab AB will offset losses from the drop in Peab AB's long position.| SolTech Energy vs. KABE Group AB | SolTech Energy vs. IAR Systems Group | SolTech Energy vs. Mekonomen AB | SolTech Energy vs. Norva24 Group AB |
| Peab AB vs. Bio Works Technologies AB | Peab AB vs. Episurf Medical AB | Peab AB vs. OptiCept Technologies AB | Peab AB 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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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