Correlation Between SolTech Energy and Raketech Group
Can any of the company-specific risk be diversified away by investing in both SolTech Energy and Raketech Group 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 Raketech Group 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 Raketech Group Holding, you can compare the effects of market volatilities on SolTech Energy and Raketech Group 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 Raketech Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of SolTech Energy and Raketech Group.
Diversification Opportunities for SolTech Energy and Raketech Group
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SolTech and Raketech is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding SolTech Energy Sweden and Raketech Group Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raketech Group Holding 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 Raketech Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raketech Group Holding has no effect on the direction of SolTech Energy i.e., SolTech Energy and Raketech Group go up and down completely randomly.
Pair Corralation between SolTech Energy and Raketech Group
Assuming the 90 days trading horizon SolTech Energy Sweden is expected to under-perform the Raketech Group. In addition to that, SolTech Energy is 1.63 times more volatile than Raketech Group Holding. It trades about -0.06 of its total potential returns per unit of risk. Raketech Group Holding is currently generating about -0.09 per unit of volatility. If you would invest 1,561 in Raketech Group Holding on September 3, 2024 and sell it today you would lose (1,112) from holding Raketech Group Holding or give up 71.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SolTech Energy Sweden vs. Raketech Group Holding
Performance |
| Timeline |
| SolTech Energy Sweden |
| Raketech Group Holding |
SolTech Energy and Raketech Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SolTech Energy and Raketech Group
The main advantage of trading using opposite SolTech Energy and Raketech Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SolTech Energy position performs unexpectedly, Raketech Group 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 Raketech Group will offset losses from the drop in Raketech Group'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 |
| Raketech Group vs. Catena Media plc | Raketech Group vs. Better Collective | Raketech Group vs. Betsson AB | Raketech Group vs. Kambi Group PLC |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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