Correlation Between SolTech Energy and Redsense Medical

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

Diversification Opportunities for SolTech Energy and Redsense Medical

0.0

Correlation Coefficient

SolTech Energy  Redsense Medical

Pay attention - limited upside

The 3 months correlation between SolTech and Redsense is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding SolTech Energy Sweden and Redsense Medical AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Redsense Medical 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 Redsense Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Redsense Medical has no effect on the direction of SolTech Energy i.e., SolTech Energy and Redsense Medical go up and down completely randomly.

Pair Corralation between SolTech Energy and Redsense Medical

Assuming the 90 days trading horizon SolTech Energy Sweden is expected to under-perform the Redsense Medical. But the stock apears to be less risky and, when comparing its historical volatility, SolTech Energy Sweden is 1.1 times less risky than Redsense Medical. The stock trades about -0.07 of its potential returns per unit of risk. The Redsense Medical AB is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  1,200  in Redsense Medical AB on October 23, 2024 and sell it today you would lose (512.00) from holding Redsense Medical AB or give up 42.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.78%
Values	Daily Returns

SolTech Energy Sweden  vs.  Redsense Medical AB

SolTech Energy Sweden

Risk-Adjusted Performance

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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.

Redsense Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Redsense Medical AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Redsense Medical is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with SolTech Energy and Redsense Medical

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

The idea behind SolTech Energy Sweden and Redsense Medical 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.

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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.