Correlation Between Energy Solar and Indexa Capital

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

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

Diversification Opportunities for Energy Solar and Indexa Capital

-0.18

Correlation Coefficient

Energy Solar  Indexa Capital

Good diversification

The 3 months correlation between Energy and Indexa is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Energy Solar Tech and Indexa Capital Group, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indexa Capital Group, and Energy 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 Energy Solar Tech are associated (or correlated) with Indexa Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indexa Capital Group, has no effect on the direction of Energy Solar i.e., Energy Solar and Indexa Capital go up and down completely randomly.

Pair Corralation between Energy Solar and Indexa Capital

Assuming the 90 days trading horizon Energy Solar Tech is expected to generate 2.34 times more return on investment than Indexa Capital. However, Energy Solar is 2.34 times more volatile than Indexa Capital Group,. It trades about -0.2 of its potential returns per unit of risk. Indexa Capital Group, is currently generating about -0.51 per unit of risk. If you would invest  324.00  in Energy Solar Tech on September 16, 2024 and sell it today you would lose (24.00) from holding Energy Solar Tech or give up 7.41% of portfolio value over 90 days.

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

Energy Solar Tech  vs.  Indexa Capital Group,

Energy Solar Tech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Energy Solar Tech has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Energy Solar is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Indexa Capital Group,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Indexa Capital Group, has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Energy Solar and Indexa Capital

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

The idea behind Energy Solar Tech and Indexa Capital Group, 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.