Correlation Between Vincit Group and Solteq PLC

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

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

Diversification Opportunities for Vincit Group and Solteq PLC

0.28

Correlation Coefficient

Vincit Group  Solteq PLC

Modest diversification

The 3 months correlation between Vincit and Solteq is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Vincit Group Oyj and Solteq PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solteq PLC and Vincit Group 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 Vincit Group Oyj 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 Vincit Group i.e., Vincit Group and Solteq PLC go up and down completely randomly.

Pair Corralation between Vincit Group and Solteq PLC

Assuming the 90 days trading horizon Vincit Group Oyj is expected to under-perform the Solteq PLC. But the stock apears to be less risky and, when comparing its historical volatility, Vincit Group Oyj is 2.26 times less risky than Solteq PLC. The stock trades about -0.2 of its potential returns per unit of risk. The Solteq PLC is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  68.00  in Solteq PLC on September 2, 2024 and sell it today you would lose (6.00) from holding Solteq PLC or give up 8.82% of portfolio value over 90 days.

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

Vincit Group Oyj  vs.  Solteq PLC

Vincit Group Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vincit Group Oyj 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 basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Solteq PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Solteq PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong essential indicators, Solteq PLC is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Vincit Group and Solteq PLC

The main advantage of trading using opposite Vincit Group and Solteq PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vincit Group 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 Vincit Group Oyj 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.