Correlation Between Solar Applied and Argosy Research

Can any of the company-specific risk be diversified away by investing in both Solar Applied and Argosy Research 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 Argosy Research 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 Argosy Research, you can compare the effects of market volatilities on Solar Applied and Argosy Research 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 Argosy Research. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solar Applied and Argosy Research.

Diversification Opportunities for Solar Applied and Argosy Research

0.2

Correlation Coefficient

Solar Applied  Argosy Research

Modest diversification

The 3 months correlation between Solar and Argosy is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Solar Applied Materials and Argosy Research in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Argosy Research 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 Argosy Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Argosy Research has no effect on the direction of Solar Applied i.e., Solar Applied and Argosy Research go up and down completely randomly.

Pair Corralation between Solar Applied and Argosy Research

Assuming the 90 days trading horizon Solar Applied Materials is expected to under-perform the Argosy Research. In addition to that, Solar Applied is 1.73 times more volatile than Argosy Research. It trades about -0.06 of its total potential returns per unit of risk. Argosy Research is currently generating about 0.04 per unit of volatility. If you would invest  15,100  in Argosy Research on October 6, 2024 and sell it today you would earn a total of  300.00  from holding Argosy Research or generate 1.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	97.73%
Values	Daily Returns

Solar Applied Materials  vs.  Argosy Research

Solar Applied Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Solar Applied Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Argosy Research

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Argosy Research are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Argosy Research 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 Argosy Research

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

The idea behind Solar Applied Materials and Argosy Research 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.

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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.