Correlation Between Data Storage and Soluna Holdings

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

By analyzing existing cross correlation between Data Storage Corp and Soluna Holdings, you can compare the effects of market volatilities on Data Storage and Soluna Holdings 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 Data Storage with a short position of Soluna Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Data Storage and Soluna Holdings.

Diversification Opportunities for Data Storage and Soluna Holdings

-0.48

Correlation Coefficient

Data Storage  Soluna Holdings

Very good diversification

The 3 months correlation between Data and Soluna is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Data Storage Corp and Soluna Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Soluna Holdings and Data Storage 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 Data Storage Corp are associated (or correlated) with Soluna Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Soluna Holdings has no effect on the direction of Data Storage i.e., Data Storage and Soluna Holdings go up and down completely randomly.

Pair Corralation between Data Storage and Soluna Holdings

Given the investment horizon of 90 days Data Storage Corp is expected to generate 0.79 times more return on investment than Soluna Holdings. However, Data Storage Corp is 1.26 times less risky than Soluna Holdings. It trades about -0.1 of its potential returns per unit of risk. Soluna Holdings is currently generating about -0.2 per unit of risk. If you would invest  475.00  in Data Storage Corp on October 17, 2024 and sell it today you would lose (56.00) from holding Data Storage Corp or give up 11.79% of portfolio value over 90 days.

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

Data Storage Corp  vs.  Soluna Holdings

Data Storage Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Data Storage Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Data Storage unveiled solid returns over the last few months and may actually be approaching a breakup point.

Soluna Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Soluna Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Data Storage and Soluna Holdings

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

The idea behind Data Storage Corp and Soluna 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.