Correlation Between SolTech Energy and Maven Wireless

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

Diversification Opportunities for SolTech Energy and Maven Wireless

-0.67

Correlation Coefficient

SolTech Energy  Maven Wireless

Excellent diversification

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

Pair Corralation between SolTech Energy and Maven Wireless

Assuming the 90 days trading horizon SolTech Energy Sweden is expected to generate 2.22 times more return on investment than Maven Wireless. However, SolTech Energy is 2.22 times more volatile than Maven Wireless Sweden. It trades about 0.15 of its potential returns per unit of risk. Maven Wireless Sweden is currently generating about -0.03 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 Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

SolTech Energy Sweden  vs.  Maven Wireless Sweden

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.

Maven Wireless Sweden

Risk-Adjusted Performance

Very Weak

Over the last 90 days Maven Wireless Sweden has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with SolTech Energy and Maven Wireless

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

The idea behind SolTech Energy Sweden and Maven Wireless Sweden 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.