Correlation Between Energy Solar and Squirrel Media

Can any of the company-specific risk be diversified away by investing in both Energy Solar and Squirrel Media 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 Squirrel Media 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 Squirrel Media SA, you can compare the effects of market volatilities on Energy Solar and Squirrel Media 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 Squirrel Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Solar and Squirrel Media.

Diversification Opportunities for Energy Solar and Squirrel Media

-0.63

Correlation Coefficient

Energy Solar  Squirrel Media

Excellent diversification

The 3 months correlation between Energy and Squirrel is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Energy Solar Tech and Squirrel Media SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Squirrel Media SA 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 Squirrel Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Squirrel Media SA has no effect on the direction of Energy Solar i.e., Energy Solar and Squirrel Media go up and down completely randomly.

Pair Corralation between Energy Solar and Squirrel Media

Assuming the 90 days trading horizon Energy Solar Tech is expected to generate 1.02 times more return on investment than Squirrel Media. However, Energy Solar is 1.02 times more volatile than Squirrel Media SA. It trades about 0.01 of its potential returns per unit of risk. Squirrel Media SA is currently generating about -0.11 per unit of risk. If you would invest  304.00  in Energy Solar Tech on September 13, 2024 and sell it today you would earn a total of  2.00  from holding Energy Solar Tech or generate 0.66% return on investment over 90 days.

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

Energy Solar Tech  vs.  Squirrel Media SA

Energy Solar Tech

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Energy Solar Tech are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Squirrel Media SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Squirrel Media SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Energy Solar and Squirrel Media

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

The idea behind Energy Solar Tech and Squirrel Media SA 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.