Correlation Between Solteq PLC and Partnera Oyj

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

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

Diversification Opportunities for Solteq PLC and Partnera Oyj

-0.42

Correlation Coefficient

Solteq PLC  Partnera Oyj

Very good diversification

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

Pair Corralation between Solteq PLC and Partnera Oyj

Assuming the 90 days trading horizon Solteq PLC is expected to generate 4.63 times less return on investment than Partnera Oyj. In addition to that, Solteq PLC is 1.03 times more volatile than Partnera Oyj. It trades about 0.02 of its total potential returns per unit of risk. Partnera Oyj is currently generating about 0.08 per unit of volatility. If you would invest  68.00  in Partnera Oyj on September 29, 2024 and sell it today you would earn a total of  10.00  from holding Partnera Oyj or generate 14.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Solteq PLC  vs.  Partnera Oyj

Solteq PLC

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Solteq PLC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong essential indicators, Solteq PLC is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Partnera Oyj

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Partnera Oyj are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Partnera Oyj sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Solteq PLC and Partnera Oyj

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

The idea behind Solteq PLC and Partnera Oyj 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.