Correlation Between Solid State and Alcor Micro

Can any of the company-specific risk be diversified away by investing in both Solid State and Alcor Micro 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 Solid State and Alcor Micro into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Solid State System and Alcor Micro, you can compare the effects of market volatilities on Solid State and Alcor Micro 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 Solid State with a short position of Alcor Micro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solid State and Alcor Micro.

Diversification Opportunities for Solid State and Alcor Micro

-0.25

Correlation Coefficient

Solid State  Alcor Micro

Very good diversification

The 3 months correlation between Solid and Alcor is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Solid State System and Alcor Micro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alcor Micro and Solid State 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 Solid State System are associated (or correlated) with Alcor Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alcor Micro has no effect on the direction of Solid State i.e., Solid State and Alcor Micro go up and down completely randomly.

Pair Corralation between Solid State and Alcor Micro

Assuming the 90 days trading horizon Solid State System is expected to under-perform the Alcor Micro. But the stock apears to be less risky and, when comparing its historical volatility, Solid State System is 1.82 times less risky than Alcor Micro. The stock trades about -0.25 of its potential returns per unit of risk. The Alcor Micro is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  13,400  in Alcor Micro on October 9, 2024 and sell it today you would earn a total of  100.00  from holding Alcor Micro or generate 0.75% return on investment over 90 days.

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

Solid State System  vs.  Alcor Micro

Solid State System

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Solid State System has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Alcor Micro

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alcor Micro are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Alcor Micro 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 Solid State and Alcor Micro

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

The idea behind Solid State System and Alcor Micro 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.