Correlation Between Corline Biomedical and SolTech Energy

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

By analyzing existing cross correlation between Corline Biomedical AB and SolTech Energy Sweden, you can compare the effects of market volatilities on Corline Biomedical and SolTech Energy 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 Corline Biomedical with a short position of SolTech Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Corline Biomedical and SolTech Energy.

Diversification Opportunities for Corline Biomedical and SolTech Energy

0.01

Correlation Coefficient

Corline Biomedical  SolTech Energy

Significant diversification

The 3 months correlation between Corline and SolTech is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Corline Biomedical AB and SolTech Energy Sweden in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SolTech Energy Sweden and Corline Biomedical 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 Corline Biomedical AB are associated (or correlated) with SolTech Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SolTech Energy Sweden has no effect on the direction of Corline Biomedical i.e., Corline Biomedical and SolTech Energy go up and down completely randomly.

Pair Corralation between Corline Biomedical and SolTech Energy

Assuming the 90 days trading horizon Corline Biomedical AB is expected to generate 0.95 times more return on investment than SolTech Energy. However, Corline Biomedical AB is 1.06 times less risky than SolTech Energy. It trades about 0.05 of its potential returns per unit of risk. SolTech Energy Sweden is currently generating about -0.17 per unit of risk. If you would invest  904.00  in Corline Biomedical AB on October 8, 2024 and sell it today you would earn a total of  80.00  from holding Corline Biomedical AB or generate 8.85% return on investment over 90 days.

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

Corline Biomedical AB  vs.  SolTech Energy Sweden

Corline Biomedical

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Corline Biomedical AB are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Corline Biomedical unveiled solid returns over the last few months and may actually be approaching a breakup point.

SolTech Energy Sweden

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SolTech Energy Sweden has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Corline Biomedical and SolTech Energy

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

The idea behind Corline Biomedical AB and SolTech Energy Sweden 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.