Correlation Between Grenergy Renovables and Soltec Power

Can any of the company-specific risk be diversified away by investing in both Grenergy 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 Grenergy 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 Grenergy Renovables SA and Soltec Power Holdings, you can compare the effects of market volatilities on Grenergy 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 Grenergy Renovables with a short position of Soltec Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grenergy Renovables and Soltec Power.

Diversification Opportunities for Grenergy Renovables and Soltec Power

0.0

Correlation Coefficient

Grenergy Renovables  Soltec Power

Pay attention - limited upside

The 3 months correlation between Grenergy and Soltec is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Grenergy 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 Grenergy 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 Grenergy 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 Grenergy Renovables i.e., Grenergy Renovables and Soltec Power go up and down completely randomly.

Pair Corralation between Grenergy Renovables and Soltec Power

If you would invest  2,850  in Grenergy Renovables SA on December 4, 2024 and sell it today you would earn a total of  835.00  from holding Grenergy Renovables SA or generate 29.3% return on investment over 90 days.

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

Grenergy Renovables SA  vs.  Soltec Power Holdings

Grenergy Renovables

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Grenergy Renovables SA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Grenergy Renovables exhibited solid returns over the last few months and may actually be approaching a breakup point.

Soltec Power Holdings

Risk-Adjusted Performance

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 rather sound essential indicators, Soltec Power is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Grenergy Renovables and Soltec Power

The main advantage of trading using opposite Grenergy Renovables and Soltec Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grenergy 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 Grenergy 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.