Correlation Between SunHydrogen and Shoals Technologies

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

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

Diversification Opportunities for SunHydrogen and Shoals Technologies

0.46

Correlation Coefficient

SunHydrogen  Shoals Technologies

Very weak diversification

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

Pair Corralation between SunHydrogen and Shoals Technologies

Given the investment horizon of 90 days SunHydrogen is expected to generate 0.97 times more return on investment than Shoals Technologies. However, SunHydrogen is 1.03 times less risky than Shoals Technologies. It trades about 0.03 of its potential returns per unit of risk. Shoals Technologies Group is currently generating about -0.13 per unit of risk. If you would invest  2.50  in SunHydrogen on December 27, 2024 and sell it today you would earn a total of  0.05  from holding SunHydrogen or generate 2.0% return on investment over 90 days.

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

SunHydrogen  vs.  Shoals Technologies Group

SunHydrogen

Risk-Adjusted Performance

Weak

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

Shoals Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shoals Technologies Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's essential indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with SunHydrogen and Shoals Technologies

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

The idea behind SunHydrogen and Shoals Technologies Group 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.