Correlation Between SolTech Energy and Skandinaviska Enskilda
Can any of the company-specific risk be diversified away by investing in both SolTech Energy and Skandinaviska Enskilda 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 Skandinaviska Enskilda 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 Skandinaviska Enskilda Banken, you can compare the effects of market volatilities on SolTech Energy and Skandinaviska Enskilda 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 Skandinaviska Enskilda. Check out your portfolio center. Please also check ongoing floating volatility patterns of SolTech Energy and Skandinaviska Enskilda.
Diversification Opportunities for SolTech Energy and Skandinaviska Enskilda
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SolTech and Skandinaviska is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding SolTech Energy Sweden and Skandinaviska Enskilda Banken in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skandinaviska Enskilda 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 Skandinaviska Enskilda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skandinaviska Enskilda has no effect on the direction of SolTech Energy i.e., SolTech Energy and Skandinaviska Enskilda go up and down completely randomly.
Pair Corralation between SolTech Energy and Skandinaviska Enskilda
Assuming the 90 days trading horizon SolTech Energy Sweden is expected to under-perform the Skandinaviska Enskilda. In addition to that, SolTech Energy is 1.86 times more volatile than Skandinaviska Enskilda Banken. It trades about -0.19 of its total potential returns per unit of risk. Skandinaviska Enskilda Banken is currently generating about 0.12 per unit of volatility. If you would invest 15,740 in Skandinaviska Enskilda Banken on November 8, 2024 and sell it today you would earn a total of 640.00 from holding Skandinaviska Enskilda Banken or generate 4.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
SolTech Energy Sweden vs. Skandinaviska Enskilda Banken
Performance |
| Timeline |
| SolTech Energy Sweden |
| Skandinaviska Enskilda |
SolTech Energy and Skandinaviska Enskilda Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SolTech Energy and Skandinaviska Enskilda
The main advantage of trading using opposite SolTech Energy and Skandinaviska Enskilda positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SolTech Energy position performs unexpectedly, Skandinaviska Enskilda 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 Skandinaviska Enskilda will offset losses from the drop in Skandinaviska Enskilda's long position.The idea behind SolTech Energy Sweden and Skandinaviska Enskilda Banken pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Skandinaviska Enskilda vs. Leading Edge Materials | Skandinaviska Enskilda vs. Serstech AB | Skandinaviska Enskilda vs. USWE Sports AB | Skandinaviska Enskilda vs. High Coast Distillery |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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