Correlation Between SolTech Energy and Midsummer

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

Diversification Opportunities for SolTech Energy and Midsummer

-0.5

Correlation Coefficient

SolTech Energy  Midsummer

Very good diversification

The 3 months correlation between SolTech and Midsummer is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding SolTech Energy Sweden and Midsummer AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Midsummer 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 Midsummer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Midsummer AB has no effect on the direction of SolTech Energy i.e., SolTech Energy and Midsummer go up and down completely randomly.

Pair Corralation between SolTech Energy and Midsummer

Assuming the 90 days trading horizon SolTech Energy Sweden is expected to under-perform the Midsummer. But the stock apears to be less risky and, when comparing its historical volatility, SolTech Energy Sweden is 1.55 times less risky than Midsummer. The stock trades about -0.15 of its potential returns per unit of risk. The Midsummer AB is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  100.00  in Midsummer AB on October 25, 2024 and sell it today you would earn a total of  6.00  from holding Midsummer AB or generate 6.0% return on investment over 90 days.

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

SolTech Energy Sweden  vs.  Midsummer AB

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 February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Midsummer AB

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Midsummer AB are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Midsummer unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SolTech Energy and Midsummer

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

The idea behind SolTech Energy Sweden and Midsummer 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.