Correlation Between Go Solar and SMA Solar

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

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

Diversification Opportunities for Go Solar and SMA Solar

0.0

Correlation Coefficient

Go Solar  SMA Solar

Pay attention - limited upside

The 3 months correlation between GSLO and SMA is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Go Solar USA and SMA Solar Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SMA Solar Technology and Go 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 Go Solar USA are associated (or correlated) with SMA Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SMA Solar Technology has no effect on the direction of Go Solar i.e., Go Solar and SMA Solar go up and down completely randomly.

Pair Corralation between Go Solar and SMA Solar

If you would invest  152.00  in SMA Solar Technology on December 26, 2024 and sell it today you would earn a total of  76.00  from holding SMA Solar Technology or generate 50.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Go Solar USA  vs.  SMA Solar Technology

Go Solar USA

Risk-Adjusted Performance

Very Weak

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

SMA Solar Technology

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SMA Solar Technology are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, SMA Solar showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Go Solar and SMA Solar

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

The idea behind Go Solar USA and SMA Solar Technology 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..