Correlation Between Spinnova and Solteq PLC

Can any of the company-specific risk be diversified away by investing in both Spinnova and Solteq PLC 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 Spinnova and Solteq PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Spinnova Oy and Solteq PLC, you can compare the effects of market volatilities on Spinnova and Solteq PLC 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 Spinnova with a short position of Solteq PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spinnova and Solteq PLC.

Diversification Opportunities for Spinnova and Solteq PLC

0.42

Correlation Coefficient

Spinnova  Solteq PLC

Very weak diversification

The 3 months correlation between Spinnova and Solteq is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Spinnova Oy and Solteq PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solteq PLC and Spinnova 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 Spinnova Oy are associated (or correlated) with Solteq PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solteq PLC has no effect on the direction of Spinnova i.e., Spinnova and Solteq PLC go up and down completely randomly.

Pair Corralation between Spinnova and Solteq PLC

Assuming the 90 days trading horizon Spinnova Oy is expected to under-perform the Solteq PLC. In addition to that, Spinnova is 2.64 times more volatile than Solteq PLC. It trades about -0.2 of its total potential returns per unit of risk. Solteq PLC is currently generating about -0.06 per unit of volatility. If you would invest  63.00  in Solteq PLC on December 3, 2024 and sell it today you would lose (5.00) from holding Solteq PLC or give up 7.94% of portfolio value over 90 days.

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

Spinnova Oy  vs.  Solteq PLC

Spinnova Oy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Spinnova Oy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Solteq PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Solteq PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Spinnova and Solteq PLC

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

The idea behind Spinnova Oy and Solteq PLC 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.