Correlation Between Solar Applied and Hi Clearance

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

By analyzing existing cross correlation between Solar Applied Materials and Hi Clearance, you can compare the effects of market volatilities on Solar Applied and Hi Clearance 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 Solar Applied with a short position of Hi Clearance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solar Applied and Hi Clearance.

Diversification Opportunities for Solar Applied and Hi Clearance

-0.44

Correlation Coefficient

Solar Applied  Hi Clearance

Very good diversification

The 3 months correlation between Solar and 1788 is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Solar Applied Materials and Hi Clearance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hi Clearance and Solar Applied 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 Solar Applied Materials are associated (or correlated) with Hi Clearance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hi Clearance has no effect on the direction of Solar Applied i.e., Solar Applied and Hi Clearance go up and down completely randomly.

Pair Corralation between Solar Applied and Hi Clearance

Assuming the 90 days trading horizon Solar Applied is expected to generate 2.52 times less return on investment than Hi Clearance. In addition to that, Solar Applied is 5.28 times more volatile than Hi Clearance. It trades about 0.01 of its total potential returns per unit of risk. Hi Clearance is currently generating about 0.17 per unit of volatility. If you would invest  13,900  in Hi Clearance on December 22, 2024 and sell it today you would earn a total of  500.00  from holding Hi Clearance or generate 3.6% return on investment over 90 days.

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

Solar Applied Materials  vs.  Hi Clearance

Solar Applied Materials

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Solar Applied Materials are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Solar Applied is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Hi Clearance

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hi Clearance are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Hi Clearance is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Solar Applied and Hi Clearance

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

The idea behind Solar Applied Materials and Hi Clearance 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.