Correlation Between First Solar and Peraso

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

By analyzing existing cross correlation between First Solar and Peraso Inc, you can compare the effects of market volatilities on First Solar and Peraso 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 Peraso. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Solar and Peraso.

Diversification Opportunities for First Solar and Peraso

0.46

Correlation Coefficient

First Solar  Peraso

Very weak diversification

The 3 months correlation between First and Peraso is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding First Solar and Peraso Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peraso Inc 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 Peraso. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peraso Inc has no effect on the direction of First Solar i.e., First Solar and Peraso go up and down completely randomly.

Pair Corralation between First Solar and Peraso

Given the investment horizon of 90 days First Solar is expected to under-perform the Peraso. But the stock apears to be less risky and, when comparing its historical volatility, First Solar is 4.34 times less risky than Peraso. The stock trades about -0.07 of its potential returns per unit of risk. The Peraso Inc is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  90.00  in Peraso Inc on October 10, 2024 and sell it today you would earn a total of  25.00  from holding Peraso Inc or generate 27.78% return on investment over 90 days.

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

First Solar  vs.  Peraso Inc

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. Even with relatively invariable essential indicators, First Solar is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Peraso Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Peraso Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Peraso is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with First Solar and Peraso

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

The idea behind First Solar and Peraso Inc 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.