Correlation Between Solar Applied and Sunfun Info

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

Diversification Opportunities for Solar Applied and Sunfun Info

0.02

Correlation Coefficient

Solar Applied  Sunfun Info

Significant diversification

The 3 months correlation between Solar and Sunfun is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Solar Applied Materials and Sunfun Info Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunfun Info 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 Sunfun Info. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunfun Info has no effect on the direction of Solar Applied i.e., Solar Applied and Sunfun Info go up and down completely randomly.

Pair Corralation between Solar Applied and Sunfun Info

Assuming the 90 days trading horizon Solar Applied Materials is expected to generate 0.68 times more return on investment than Sunfun Info. However, Solar Applied Materials is 1.47 times less risky than Sunfun Info. It trades about -0.08 of its potential returns per unit of risk. Sunfun Info Co is currently generating about -0.1 per unit of risk. If you would invest  6,260  in Solar Applied Materials on October 22, 2024 and sell it today you would lose (250.00) from holding Solar Applied Materials or give up 3.99% of portfolio value over 90 days.

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

Solar Applied Materials  vs.  Sunfun Info Co

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.

Sunfun Info

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sunfun Info Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Sunfun Info showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Solar Applied and Sunfun Info

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

The idea behind Solar Applied Materials and Sunfun Info Co 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.