Correlation Between Almirall and Solaria Energa

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

By analyzing existing cross correlation between Almirall SA and Solaria Energa y, you can compare the effects of market volatilities on Almirall and Solaria Energa 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 Almirall with a short position of Solaria Energa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Almirall and Solaria Energa.

Diversification Opportunities for Almirall and Solaria Energa

0.19

Correlation Coefficient

Almirall  Solaria Energa

Average diversification

The 3 months correlation between Almirall and Solaria is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Almirall SA and Solaria Energa y in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solaria Energa y and Almirall 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 Almirall SA are associated (or correlated) with Solaria Energa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solaria Energa y has no effect on the direction of Almirall i.e., Almirall and Solaria Energa go up and down completely randomly.

Pair Corralation between Almirall and Solaria Energa

Assuming the 90 days trading horizon Almirall SA is expected to generate 0.52 times more return on investment than Solaria Energa. However, Almirall SA is 1.91 times less risky than Solaria Energa. It trades about 0.0 of its potential returns per unit of risk. Solaria Energa y is currently generating about -0.13 per unit of risk. If you would invest  888.00  in Almirall SA on September 2, 2024 and sell it today you would lose (3.00) from holding Almirall SA or give up 0.34% of portfolio value over 90 days.

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

Almirall SA  vs.  Solaria Energa y

Almirall SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Almirall SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, Almirall is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Solaria Energa y

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Solaria Energa y 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 basic 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 Almirall and Solaria Energa

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

The idea behind Almirall SA and Solaria Energa y 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.