Correlation Between Amprius Technologies and Solid Power

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

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

Diversification Opportunities for Amprius Technologies and Solid Power

0.6

Correlation Coefficient

Amprius Technologies  Solid Power

Poor diversification

The 3 months correlation between Amprius and Solid is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Amprius Technologies and Solid Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solid Power and Amprius Technologies 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 Amprius Technologies are associated (or correlated) with Solid Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solid Power has no effect on the direction of Amprius Technologies i.e., Amprius Technologies and Solid Power go up and down completely randomly.

Pair Corralation between Amprius Technologies and Solid Power

Given the investment horizon of 90 days Amprius Technologies is expected to generate 1.32 times more return on investment than Solid Power. However, Amprius Technologies is 1.32 times more volatile than Solid Power. It trades about 0.14 of its potential returns per unit of risk. Solid Power is currently generating about 0.1 per unit of risk. If you would invest  207.00  in Amprius Technologies on November 19, 2024 and sell it today you would earn a total of  132.00  from holding Amprius Technologies or generate 63.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Amprius Technologies  vs.  Solid Power

Amprius Technologies

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Amprius Technologies are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Amprius Technologies showed solid returns over the last few months and may actually be approaching a breakup point.

Solid Power

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Solid Power are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile fundamental indicators, Solid Power reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Amprius Technologies and Solid Power

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

The idea behind Amprius Technologies and Solid Power 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.