Correlation Between Soluna Holdings and Alternet Systems

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

By analyzing existing cross correlation between Soluna Holdings Preferred and Alternet Systems, you can compare the effects of market volatilities on Soluna Holdings and Alternet Systems 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 Alternet Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Soluna Holdings and Alternet Systems.

Diversification Opportunities for Soluna Holdings and Alternet Systems

0.6

Correlation Coefficient

Soluna Holdings  Alternet Systems

Poor diversification

The 3 months correlation between Soluna and Alternet is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Soluna Holdings Preferred and Alternet Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alternet Systems 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 Preferred are associated (or correlated) with Alternet Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alternet Systems has no effect on the direction of Soluna Holdings i.e., Soluna Holdings and Alternet Systems go up and down completely randomly.

Pair Corralation between Soluna Holdings and Alternet Systems

Assuming the 90 days horizon Soluna Holdings Preferred is expected to under-perform the Alternet Systems. But the preferred stock apears to be less risky and, when comparing its historical volatility, Soluna Holdings Preferred is 1.74 times less risky than Alternet Systems. The preferred stock trades about -0.1 of its potential returns per unit of risk. The Alternet Systems is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  0.10  in Alternet Systems on December 21, 2024 and sell it today you would lose (0.02) from holding Alternet Systems or give up 20.0% of portfolio value over 90 days.

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

Soluna Holdings Preferred  vs.  Alternet Systems

Soluna Holdings Preferred

Risk-Adjusted Performance

Very Weak

Over the last 90 days Soluna Holdings Preferred has generated negative risk-adjusted returns adding no value to investors with long positions. Even with inconsistent performance in the last few months, the Preferred Stock's technical indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Alternet Systems

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alternet Systems has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Alternet Systems is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Soluna Holdings and Alternet Systems

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

The idea behind Soluna Holdings Preferred and Alternet Systems 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.