Correlation Between SolTech Energy and Zaptec AS

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

Diversification Opportunities for SolTech Energy and Zaptec AS

0.72

Correlation Coefficient

SolTech Energy  Zaptec AS

Poor diversification

The 3 months correlation between SolTech and Zaptec is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding SolTech Energy Sweden and Zaptec AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zaptec AS 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 Zaptec AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zaptec AS has no effect on the direction of SolTech Energy i.e., SolTech Energy and Zaptec AS go up and down completely randomly.

Pair Corralation between SolTech Energy and Zaptec AS

Assuming the 90 days trading horizon SolTech Energy Sweden is expected to generate 1.64 times more return on investment than Zaptec AS. However, SolTech Energy is 1.64 times more volatile than Zaptec AS. It trades about 0.15 of its potential returns per unit of risk. Zaptec AS is currently generating about 0.16 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	Significant
Accuracy	98.44%
Values	Daily Returns

SolTech Energy Sweden  vs.  Zaptec AS

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.

Zaptec AS

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Zaptec AS are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Zaptec AS disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SolTech Energy and Zaptec AS

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

The idea behind SolTech Energy Sweden and Zaptec AS 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.