Correlation Between Soluna Holdings and POSaBIT Systems

Can any of the company-specific risk be diversified away by investing in both Soluna Holdings and POSaBIT 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 POSaBIT 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 POSaBIT Systems Corp, you can compare the effects of market volatilities on Soluna Holdings and POSaBIT 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 POSaBIT Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Soluna Holdings and POSaBIT Systems.

Diversification Opportunities for Soluna Holdings and POSaBIT Systems

-0.1

Correlation Coefficient

Soluna Holdings  POSaBIT Systems

Good diversification

The 3 months correlation between Soluna and POSaBIT is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Soluna Holdings Preferred and POSaBIT Systems Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POSaBIT Systems 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 Preferred are associated (or correlated) with POSaBIT Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of POSaBIT Systems Corp has no effect on the direction of Soluna Holdings i.e., Soluna Holdings and POSaBIT Systems go up and down completely randomly.

Pair Corralation between Soluna Holdings and POSaBIT Systems

Assuming the 90 days horizon Soluna Holdings Preferred is expected to under-perform the POSaBIT Systems. But the preferred stock apears to be less risky and, when comparing its historical volatility, Soluna Holdings Preferred is 1.96 times less risky than POSaBIT Systems. The preferred stock trades about -0.23 of its potential returns per unit of risk. The POSaBIT Systems Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  6.82  in POSaBIT Systems Corp on October 4, 2024 and sell it today you would lose (0.22) from holding POSaBIT Systems Corp or give up 3.23% of portfolio value over 90 days.

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

Soluna Holdings Preferred  vs.  POSaBIT Systems Corp

Soluna Holdings Preferred

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Soluna Holdings Preferred are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent technical indicators, Soluna Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

POSaBIT Systems Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days POSaBIT Systems Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Soluna Holdings and POSaBIT Systems

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

The idea behind Soluna Holdings Preferred and POSaBIT Systems 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.