Correlation Between BenQ Materials and Solar Applied

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Can any of the company-specific risk be diversified away by investing in both BenQ Materials and Solar 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 BenQ Materials and Solar Applied into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BenQ Materials Corp and Solar Applied Materials, you can compare the effects of market volatilities on BenQ Materials and Solar 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 BenQ Materials with a short position of Solar Applied. Check out your portfolio center. Please also check ongoing floating volatility patterns of BenQ Materials and Solar Applied.

Diversification Opportunities for BenQ Materials and Solar Applied

BenQSolarDiversified AwayBenQSolarDiversified Away100%
-0.36
  Correlation Coefficient

Very good diversification

The 3 months correlation between BenQ and Solar is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding BenQ Materials Corp and Solar Applied Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solar Applied Materials and BenQ Materials 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 BenQ Materials Corp are associated (or correlated) with Solar Applied. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solar Applied Materials has no effect on the direction of BenQ Materials i.e., BenQ Materials and Solar Applied go up and down completely randomly.

Pair Corralation between BenQ Materials and Solar Applied

Assuming the 90 days trading horizon BenQ Materials is expected to generate 3.56 times less return on investment than Solar Applied. But when comparing it to its historical volatility, BenQ Materials Corp is 1.25 times less risky than Solar Applied. It trades about 0.0 of its potential returns per unit of risk. Solar Applied Materials is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  6,750  in Solar Applied Materials on September 15, 2024 and sell it today you would earn a total of  20.00  from holding Solar Applied Materials or generate 0.3% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

BenQ Materials Corp  vs.  Solar Applied Materials

 Performance 
JavaScript chart by amCharts 3.21.15OctNov 051015
JavaScript chart by amCharts 3.21.158215 1785
       Timeline  
BenQ Materials Corp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days BenQ Materials Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, BenQ Materials is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec30.53131.53232.53333.53434.5
Solar Applied Materials 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Solar Applied Materials are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Solar Applied is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec5860626466687072

BenQ Materials and Solar Applied Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-5.72-4.29-2.85-1.410.02451.442.914.385.85 0.020.040.060.080.100.12
JavaScript chart by amCharts 3.21.158215 1785
       Returns  

Pair Trading with BenQ Materials and Solar Applied

The main advantage of trading using opposite BenQ Materials and Solar Applied positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BenQ Materials position performs unexpectedly, Solar 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 Solar Applied will offset losses from the drop in Solar Applied's long position.
The idea behind BenQ Materials Corp and Solar 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.
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.

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