Correlation Between Online Brands and SolTech Energy
Can any of the company-specific risk be diversified away by investing in both Online Brands and SolTech Energy 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 Online Brands and SolTech Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Online Brands Nordic and SolTech Energy Sweden, you can compare the effects of market volatilities on Online Brands and SolTech Energy 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 Online Brands with a short position of SolTech Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Online Brands and SolTech Energy.
Diversification Opportunities for Online Brands and SolTech Energy
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Online and SolTech is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Online Brands Nordic and SolTech Energy Sweden in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SolTech Energy Sweden and Online Brands 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 Online Brands Nordic are associated (or correlated) with SolTech Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SolTech Energy Sweden has no effect on the direction of Online Brands i.e., Online Brands and SolTech Energy go up and down completely randomly.
Pair Corralation between Online Brands and SolTech Energy
Assuming the 90 days trading horizon Online Brands Nordic is expected to generate 0.6 times more return on investment than SolTech Energy. However, Online Brands Nordic is 1.67 times less risky than SolTech Energy. It trades about -0.02 of its potential returns per unit of risk. SolTech Energy Sweden is currently generating about -0.12 per unit of risk. If you would invest 1,455 in Online Brands Nordic on April 23, 2025 and sell it today you would lose (60.00) from holding Online Brands Nordic or give up 4.12% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Online Brands Nordic vs. SolTech Energy Sweden
Performance |
Timeline |
Online Brands Nordic |
SolTech Energy Sweden |
Online Brands and SolTech Energy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Online Brands and SolTech Energy
The main advantage of trading using opposite Online Brands and SolTech Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Online Brands position performs unexpectedly, SolTech Energy 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 SolTech Energy will offset losses from the drop in SolTech Energy's long position.Online Brands vs. Desenio Group AB | Online Brands vs. Yunji Inc | Online Brands vs. NetJobs Group AB | Online Brands vs. Mantex AB |
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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