Correlation Between FineMat Applied and Solomon Technology

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

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

Diversification Opportunities for FineMat Applied and Solomon Technology

-0.29

Correlation Coefficient

FineMat Applied  Solomon Technology

Very good diversification

The 3 months correlation between FineMat and Solomon is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding FineMat Applied Materials and Solomon Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solomon Technology Corp and FineMat 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 FineMat Applied Materials are associated (or correlated) with Solomon Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solomon Technology Corp has no effect on the direction of FineMat Applied i.e., FineMat Applied and Solomon Technology go up and down completely randomly.

Pair Corralation between FineMat Applied and Solomon Technology

Assuming the 90 days trading horizon FineMat Applied is expected to generate 4.22 times less return on investment than Solomon Technology. But when comparing it to its historical volatility, FineMat Applied Materials is 1.23 times less risky than Solomon Technology. It trades about 0.03 of its potential returns per unit of risk. Solomon Technology Corp is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  2,635  in Solomon Technology Corp on October 11, 2024 and sell it today you would earn a total of  12,615  from holding Solomon Technology Corp or generate 478.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.79%
Values	Daily Returns

FineMat Applied Materials  vs.  Solomon Technology Corp

FineMat Applied Materials

Risk-Adjusted Performance

0 of 100

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 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.

Solomon Technology Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Solomon Technology Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Solomon Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FineMat Applied and Solomon Technology

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

The idea behind FineMat Applied Materials and Solomon Technology Corp 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.