Correlation Between SunHydrogen and First Solar

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

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

Diversification Opportunities for SunHydrogen and First Solar

0.69

Correlation Coefficient

SunHydrogen  First Solar

Poor diversification

The 3 months correlation between SunHydrogen and First is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding SunHydrogen and First Solar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Solar and SunHydrogen 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 SunHydrogen are associated (or correlated) with First Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Solar has no effect on the direction of SunHydrogen i.e., SunHydrogen and First Solar go up and down completely randomly.

Pair Corralation between SunHydrogen and First Solar

Given the investment horizon of 90 days SunHydrogen is expected to generate 3.08 times more return on investment than First Solar. However, SunHydrogen is 3.08 times more volatile than First Solar. It trades about 0.22 of its potential returns per unit of risk. First Solar is currently generating about 0.11 per unit of risk. If you would invest  1.80  in SunHydrogen on September 16, 2024 and sell it today you would earn a total of  0.60  from holding SunHydrogen or generate 33.33% return on investment over 90 days.

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

SunHydrogen  vs.  First Solar

SunHydrogen

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SunHydrogen has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unsteady performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

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 latest uncertain performance, the Stock's essential indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with SunHydrogen and First Solar

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

The idea behind SunHydrogen and First Solar 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.