Correlation Between SolTech Energy and AAC Clyde

Can any of the company-specific risk be diversified away by investing in both SolTech Energy and AAC Clyde 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 SolTech Energy and AAC Clyde into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SolTech Energy Sweden and AAC Clyde Space, you can compare the effects of market volatilities on SolTech Energy and AAC Clyde 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 SolTech Energy with a short position of AAC Clyde. Check out your portfolio center. Please also check ongoing floating volatility patterns of SolTech Energy and AAC Clyde.

Diversification Opportunities for SolTech Energy and AAC Clyde

-0.67

Correlation Coefficient

SolTech Energy  AAC Clyde

Excellent diversification

The 3 months correlation between SolTech and AAC is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding SolTech Energy Sweden and AAC Clyde Space in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AAC Clyde Space and SolTech Energy 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 SolTech Energy Sweden are associated (or correlated) with AAC Clyde. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AAC Clyde Space has no effect on the direction of SolTech Energy i.e., SolTech Energy and AAC Clyde go up and down completely randomly.

Pair Corralation between SolTech Energy and AAC Clyde

Assuming the 90 days trading horizon SolTech Energy Sweden is expected to under-perform the AAC Clyde. In addition to that, SolTech Energy is 1.06 times more volatile than AAC Clyde Space. It trades about -0.12 of its total potential returns per unit of risk. AAC Clyde Space is currently generating about 0.12 per unit of volatility. If you would invest  3,550  in AAC Clyde Space on August 31, 2024 and sell it today you would earn a total of  1,020  from holding AAC Clyde Space or generate 28.73% return on investment over 90 days.

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

SolTech Energy Sweden  vs.  AAC Clyde Space

SolTech Energy Sweden

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SolTech Energy Sweden has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

AAC Clyde Space

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AAC Clyde Space are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental indicators, AAC Clyde unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SolTech Energy and AAC Clyde

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

The idea behind SolTech Energy Sweden and AAC Clyde Space 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..