Correlation Between Ascent Solar and Solar Alliance

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

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

Diversification Opportunities for Ascent Solar and Solar Alliance

0.22

Correlation Coefficient

Ascent Solar  Solar Alliance

Modest diversification

The 3 months correlation between Ascent and Solar is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Ascent Solar Technologies, and Solar Alliance Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solar Alliance Energy and Ascent Solar 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 Ascent Solar Technologies, are associated (or correlated) with Solar Alliance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solar Alliance Energy has no effect on the direction of Ascent Solar i.e., Ascent Solar and Solar Alliance go up and down completely randomly.

Pair Corralation between Ascent Solar and Solar Alliance

Given the investment horizon of 90 days Ascent Solar Technologies, is expected to generate 0.72 times more return on investment than Solar Alliance. However, Ascent Solar Technologies, is 1.38 times less risky than Solar Alliance. It trades about 0.02 of its potential returns per unit of risk. Solar Alliance Energy is currently generating about -0.06 per unit of risk. If you would invest  262.00  in Ascent Solar Technologies, on September 5, 2024 and sell it today you would lose (7.00) from holding Ascent Solar Technologies, or give up 2.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Ascent Solar Technologies,  vs.  Solar Alliance Energy

Ascent Solar Technol

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ascent Solar Technologies, are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Ascent Solar may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Solar Alliance Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Solar Alliance Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Ascent Solar and Solar Alliance

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

The idea behind Ascent Solar Technologies, and Solar Alliance Energy 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.