Correlation Between Electronic Arts and Solidion Technology

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

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

Diversification Opportunities for Electronic Arts and Solidion Technology

-0.25

Correlation Coefficient

Electronic Arts  Solidion Technology

Very good diversification

The 3 months correlation between Electronic and Solidion is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Electronic Arts and Solidion Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solidion Technology and Electronic Arts 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 Electronic Arts are associated (or correlated) with Solidion Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solidion Technology has no effect on the direction of Electronic Arts i.e., Electronic Arts and Solidion Technology go up and down completely randomly.

Pair Corralation between Electronic Arts and Solidion Technology

Allowing for the 90-day total investment horizon Electronic Arts is expected to under-perform the Solidion Technology. But the stock apears to be less risky and, when comparing its historical volatility, Electronic Arts is 18.78 times less risky than Solidion Technology. The stock trades about -0.61 of its potential returns per unit of risk. The Solidion Technology is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  41.00  in Solidion Technology on October 14, 2024 and sell it today you would earn a total of  17.00  from holding Solidion Technology or generate 41.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Electronic Arts  vs.  Solidion Technology

Electronic Arts

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Electronic Arts has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Electronic Arts is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Solidion Technology

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Solidion Technology are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, Solidion Technology demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Electronic Arts and Solidion Technology

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

The idea behind Electronic Arts and Solidion Technology 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.