Correlation Between First Solar and FIRST SAVINGS

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

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

Diversification Opportunities for First Solar and FIRST SAVINGS

-0.36

Correlation Coefficient

First Solar  FIRST SAVINGS

Very good diversification

The 3 months correlation between First and FIRST is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding First Solar and FIRST SAVINGS FINL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIRST SAVINGS FINL and First 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 First Solar are associated (or correlated) with FIRST SAVINGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIRST SAVINGS FINL has no effect on the direction of First Solar i.e., First Solar and FIRST SAVINGS go up and down completely randomly.

Pair Corralation between First Solar and FIRST SAVINGS

Assuming the 90 days trading horizon First Solar is expected to generate 0.84 times more return on investment than FIRST SAVINGS. However, First Solar is 1.2 times less risky than FIRST SAVINGS. It trades about -0.05 of its potential returns per unit of risk. FIRST SAVINGS FINL is currently generating about -0.2 per unit of risk. If you would invest  19,052  in First Solar on October 12, 2024 and sell it today you would lose (466.00) from holding First Solar or give up 2.45% of portfolio value over 90 days.

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

First Solar  vs.  FIRST SAVINGS FINL

First Solar

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Solar has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, First Solar is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

FIRST SAVINGS FINL

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FIRST SAVINGS FINL are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, FIRST SAVINGS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with First Solar and FIRST SAVINGS

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

The idea behind First Solar and FIRST SAVINGS FINL 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.