Correlation Between Solomon Technology and FineMat Applied

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

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

Diversification Opportunities for Solomon Technology and FineMat Applied

0.56

Correlation Coefficient

Solomon Technology  FineMat Applied

Very weak diversification

The 3 months correlation between Solomon and FineMat is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Solomon Technology Corp and FineMat Applied Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FineMat Applied Materials and Solomon Technology 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 Solomon Technology Corp are associated (or correlated) with FineMat Applied. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FineMat Applied Materials has no effect on the direction of Solomon Technology i.e., Solomon Technology and FineMat Applied go up and down completely randomly.

Pair Corralation between Solomon Technology and FineMat Applied

Assuming the 90 days trading horizon Solomon Technology Corp is expected to under-perform the FineMat Applied. In addition to that, Solomon Technology is 1.71 times more volatile than FineMat Applied Materials. It trades about -0.06 of its total potential returns per unit of risk. FineMat Applied Materials is currently generating about -0.06 per unit of volatility. If you would invest  3,620  in FineMat Applied Materials on December 22, 2024 and sell it today you would lose (205.00) from holding FineMat Applied Materials or give up 5.66% of portfolio value over 90 days.

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

Solomon Technology Corp  vs.  FineMat Applied Materials

Solomon Technology Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Solomon Technology Corp 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.

FineMat Applied Materials

Risk-Adjusted Performance

Very Weak

Over the last 90 days FineMat Applied Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, FineMat Applied 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 Solomon Technology and FineMat Applied

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

The idea behind Solomon Technology Corp and FineMat Applied Materials 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.