Correlation Between Audax Renovables and Soltec Power

Can any of the company-specific risk be diversified away by investing in both Audax Renovables and Soltec Power 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 Audax Renovables and Soltec Power into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Audax Renovables SA and Soltec Power Holdings, you can compare the effects of market volatilities on Audax Renovables and Soltec Power 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 Audax Renovables with a short position of Soltec Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Audax Renovables and Soltec Power.

Diversification Opportunities for Audax Renovables and Soltec Power

0.22

Correlation Coefficient

Audax Renovables  Soltec Power

Modest diversification

The 3 months correlation between Audax and Soltec is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Audax Renovables SA and Soltec Power Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Soltec Power Holdings and Audax Renovables 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 Audax Renovables SA are associated (or correlated) with Soltec Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Soltec Power Holdings has no effect on the direction of Audax Renovables i.e., Audax Renovables and Soltec Power go up and down completely randomly.

Pair Corralation between Audax Renovables and Soltec Power

Assuming the 90 days trading horizon Audax Renovables SA is expected to generate 0.87 times more return on investment than Soltec Power. However, Audax Renovables SA is 1.16 times less risky than Soltec Power. It trades about 0.08 of its potential returns per unit of risk. Soltec Power Holdings is currently generating about -0.06 per unit of risk. If you would invest  76.00  in Audax Renovables SA on September 13, 2024 and sell it today you would earn a total of  85.00  from holding Audax Renovables SA or generate 111.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Audax Renovables SA  vs.  Soltec Power Holdings

Audax Renovables

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Audax Renovables SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Soltec Power Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Soltec Power Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's essential indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Audax Renovables and Soltec Power

The main advantage of trading using opposite Audax Renovables and Soltec Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Audax Renovables position performs unexpectedly, Soltec Power 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 Soltec Power will offset losses from the drop in Soltec Power's long position.

The idea behind Audax Renovables SA and Soltec Power Holdings 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.

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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.