Correlation Between Soluna Holdings and Data Storage

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

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

Diversification Opportunities for Soluna Holdings and Data Storage

-0.31

Correlation Coefficient

Soluna Holdings  Data Storage

Very good diversification

The 3 months correlation between Soluna and Data is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Soluna Holdings and Data Storage Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Data Storage Corp and Soluna Holdings 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 Soluna Holdings are associated (or correlated) with Data Storage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Data Storage Corp has no effect on the direction of Soluna Holdings i.e., Soluna Holdings and Data Storage go up and down completely randomly.

Pair Corralation between Soluna Holdings and Data Storage

Given the investment horizon of 90 days Soluna Holdings is expected to under-perform the Data Storage. In addition to that, Soluna Holdings is 1.57 times more volatile than Data Storage Corp. It trades about -0.07 of its total potential returns per unit of risk. Data Storage Corp is currently generating about -0.05 per unit of volatility. If you would invest  687.00  in Data Storage Corp on September 29, 2024 and sell it today you would lose (254.00) from holding Data Storage Corp or give up 36.97% of portfolio value over 90 days.

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

Soluna Holdings  vs.  Data Storage Corp

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 January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

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.

Pair Trading with Soluna Holdings and Data Storage

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

The idea behind Soluna Holdings and Data Storage Corp 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.