Correlation Between Deoleo SA and Solaria Energa

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

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

Diversification Opportunities for Deoleo SA and Solaria Energa

0.29

Correlation Coefficient

Deoleo SA  Solaria Energa

Modest diversification

The 3 months correlation between Deoleo and Solaria is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Deoleo 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 Deoleo SA 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 Deoleo 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 Deoleo SA i.e., Deoleo SA and Solaria Energa go up and down completely randomly.

Pair Corralation between Deoleo SA and Solaria Energa

Assuming the 90 days trading horizon Deoleo SA is expected to generate 1.04 times more return on investment than Solaria Energa. However, Deoleo SA is 1.04 times more volatile than Solaria Energa y. It trades about 0.01 of its potential returns per unit of risk. Solaria Energa y is currently generating about -0.05 per unit of risk. If you would invest  19.00  in Deoleo SA on December 30, 2024 and sell it today you would earn a total of  0.00  from holding Deoleo SA or generate 0.0% return on investment over 90 days.

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

Deoleo SA  vs.  Solaria Energa y

Deoleo SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Deoleo SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Deoleo SA 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

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 latest unsteady performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Deoleo SA and Solaria Energa

The main advantage of trading using opposite Deoleo SA and Solaria Energa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deoleo SA 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 Deoleo 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.