Correlation Between Saule Technologies and WIG 30

Can any of the company-specific risk be diversified away by investing in both Saule Technologies and WIG 30 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 Saule Technologies and WIG 30 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Saule Technologies SA and WIG 30, you can compare the effects of market volatilities on Saule Technologies and WIG 30 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 Saule Technologies with a short position of WIG 30. Check out your portfolio center. Please also check ongoing floating volatility patterns of Saule Technologies and WIG 30.

Diversification Opportunities for Saule Technologies and WIG 30

0.66

Correlation Coefficient

Saule Technologies  WIG 30

Poor diversification

The 3 months correlation between Saule and WIG is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Saule Technologies SA and WIG 30 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WIG 30 and Saule Technologies 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 Saule Technologies SA are associated (or correlated) with WIG 30. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WIG 30 has no effect on the direction of Saule Technologies i.e., Saule Technologies and WIG 30 go up and down completely randomly.

Pair Corralation between Saule Technologies and WIG 30

Assuming the 90 days trading horizon Saule Technologies SA is expected to under-perform the WIG 30. In addition to that, Saule Technologies is 2.93 times more volatile than WIG 30. It trades about -0.08 of its total potential returns per unit of risk. WIG 30 is currently generating about 0.05 per unit of volatility. If you would invest  244,167  in WIG 30 on October 5, 2024 and sell it today you would earn a total of  42,579  from holding WIG 30 or generate 17.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.67%
Values	Daily Returns

Saule Technologies SA  vs.  WIG 30

Pair Trading with Saule Technologies and WIG 30

The main advantage of trading using opposite Saule Technologies and WIG 30 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Saule Technologies position performs unexpectedly, WIG 30 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 WIG 30 will offset losses from the drop in WIG 30's long position.

The idea behind Saule Technologies SA and WIG 30 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.