Correlation Between Aterian and Sunedison

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

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

Diversification Opportunities for Aterian and Sunedison

0.75

Correlation Coefficient

Aterian  Sunedison

Poor diversification

The 3 months correlation between Aterian and Sunedison is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Aterian and Sunedison in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunedison and Aterian 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 Aterian are associated (or correlated) with Sunedison. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunedison has no effect on the direction of Aterian i.e., Aterian and Sunedison go up and down completely randomly.

Pair Corralation between Aterian and Sunedison

Given the investment horizon of 90 days Aterian is expected to generate 0.3 times more return on investment than Sunedison. However, Aterian is 3.34 times less risky than Sunedison. It trades about -0.14 of its potential returns per unit of risk. Sunedison is currently generating about -0.11 per unit of risk. If you would invest  317.00  in Aterian on September 15, 2024 and sell it today you would lose (80.00) from holding Aterian or give up 25.24% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

Aterian  vs.  Sunedison

Aterian

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aterian has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Sunedison

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sunedison has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Aterian and Sunedison

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

The idea behind Aterian and Sunedison 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 Global Correlations module to find global opportunities by holding instruments from different markets.