Correlation Between Mene and Solar Alliance

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

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

Diversification Opportunities for Mene and Solar Alliance

-0.32

Correlation Coefficient

Mene  Solar Alliance

Very good diversification

The 3 months correlation between Mene and Solar is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Mene Inc and Solar Alliance Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solar Alliance Energy and Mene 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 Mene Inc are associated (or correlated) with Solar Alliance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solar Alliance Energy has no effect on the direction of Mene i.e., Mene and Solar Alliance go up and down completely randomly.

Pair Corralation between Mene and Solar Alliance

If you would invest  12.00  in Mene Inc on December 29, 2024 and sell it today you would earn a total of  3.00  from holding Mene Inc or generate 25.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Mene Inc  vs.  Solar Alliance Energy

Mene Inc

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mene Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Mene showed solid returns over the last few months and may actually be approaching a breakup point.

Solar Alliance Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Solar Alliance Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable essential indicators, Solar Alliance is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Mene and Solar Alliance

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

The idea behind Mene Inc and Solar Alliance Energy 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.