Correlation Between SolTech Energy and Cortus Energy

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

Diversification Opportunities for SolTech Energy and Cortus Energy

0.17

Correlation Coefficient

SolTech Energy  Cortus Energy

Average diversification

The 3 months correlation between SolTech and Cortus is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding SolTech Energy Sweden and Cortus Energy AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cortus Energy AB 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 Cortus Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cortus Energy AB has no effect on the direction of SolTech Energy i.e., SolTech Energy and Cortus Energy go up and down completely randomly.

Pair Corralation between SolTech Energy and Cortus Energy

Assuming the 90 days trading horizon SolTech Energy Sweden is expected to generate 1.32 times more return on investment than Cortus Energy. However, SolTech Energy is 1.32 times more volatile than Cortus Energy AB. It trades about 0.15 of its potential returns per unit of risk. Cortus Energy AB is currently generating about 0.06 per unit of risk. If you would invest  167.00  in SolTech Energy Sweden on December 30, 2024 and sell it today you would earn a total of  139.00  from holding SolTech Energy Sweden or generate 83.23% return on investment over 90 days.

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

SolTech Energy Sweden  vs.  Cortus Energy AB

SolTech Energy Sweden

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SolTech Energy Sweden are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, SolTech Energy unveiled solid returns over the last few months and may actually be approaching a breakup point.

Cortus Energy AB

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cortus Energy AB are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Cortus Energy unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SolTech Energy and Cortus Energy

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

The idea behind SolTech Energy Sweden and Cortus Energy AB 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.

Check out your portfolio center.

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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.