Correlation Between First Solar and Pixelworks

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

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

Diversification Opportunities for First Solar and Pixelworks

0.41

Correlation Coefficient

First Solar  Pixelworks

Very weak diversification

The 3 months correlation between First and Pixelworks is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding First Solar and Pixelworks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pixelworks 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 Pixelworks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pixelworks has no effect on the direction of First Solar i.e., First Solar and Pixelworks go up and down completely randomly.

Pair Corralation between First Solar and Pixelworks

Given the investment horizon of 90 days First Solar is expected to generate 4.27 times less return on investment than Pixelworks. But when comparing it to its historical volatility, First Solar is 2.1 times less risky than Pixelworks. It trades about 0.09 of its potential returns per unit of risk. Pixelworks is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  70.00  in Pixelworks on October 22, 2024 and sell it today you would earn a total of  11.00  from holding Pixelworks or generate 15.71% 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.  Pixelworks

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.

Pixelworks

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pixelworks are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, Pixelworks may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with First Solar and Pixelworks

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

The idea behind First Solar and Pixelworks 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.