Correlation Between Indie Semiconductor and First Solar

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

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

Diversification Opportunities for Indie Semiconductor and First Solar

0.9

Correlation Coefficient

Indie Semiconductor  First Solar

Almost no diversification

The 3 months correlation between Indie and First is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding indie Semiconductor and First Solar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Solar and Indie Semiconductor 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 indie Semiconductor 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 Indie Semiconductor i.e., Indie Semiconductor and First Solar go up and down completely randomly.

Pair Corralation between Indie Semiconductor and First Solar

Given the investment horizon of 90 days indie Semiconductor is expected to under-perform the First Solar. In addition to that, Indie Semiconductor is 1.62 times more volatile than First Solar. It trades about -0.17 of its total potential returns per unit of risk. First Solar is currently generating about -0.16 per unit of volatility. If you would invest  17,588  in First Solar on December 19, 2024 and sell it today you would lose (4,854) from holding First Solar or give up 27.6% of portfolio value over 90 days.

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

indie Semiconductor  vs.  First Solar

indie Semiconductor

Risk-Adjusted Performance

Very Weak

Over the last 90 days indie Semiconductor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

First Solar

Risk-Adjusted Performance

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 inconsistent performance in the last few months, the Stock's essential indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Indie Semiconductor and First Solar

The main advantage of trading using opposite Indie Semiconductor and First Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indie Semiconductor 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 indie Semiconductor 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.

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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.