Correlation Between Mauna Kea and Soditech

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

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

Diversification Opportunities for Mauna Kea and Soditech

0.32

Correlation Coefficient

Mauna Kea  Soditech

Weak diversification

The 3 months correlation between Mauna and Soditech is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Mauna Kea Technologies and Soditech SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Soditech SA and Mauna Kea 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 Mauna Kea Technologies are associated (or correlated) with Soditech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Soditech SA has no effect on the direction of Mauna Kea i.e., Mauna Kea and Soditech go up and down completely randomly.

Pair Corralation between Mauna Kea and Soditech

Assuming the 90 days trading horizon Mauna Kea Technologies is expected to generate 0.67 times more return on investment than Soditech. However, Mauna Kea Technologies is 1.49 times less risky than Soditech. It trades about 0.1 of its potential returns per unit of risk. Soditech SA is currently generating about 0.02 per unit of risk. If you would invest  17.00  in Mauna Kea Technologies on October 8, 2024 and sell it today you would earn a total of  1.00  from holding Mauna Kea Technologies or generate 5.88% return on investment over 90 days.

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

Mauna Kea Technologies  vs.  Soditech SA

Mauna Kea Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mauna Kea Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Soditech SA

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Soditech SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, Soditech is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Mauna Kea and Soditech

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

The idea behind Mauna Kea Technologies and Soditech SA 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.