Correlation Between Newhydrogen and SPI Energy

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

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

Diversification Opportunities for Newhydrogen and SPI Energy

0.71

Correlation Coefficient

Newhydrogen  SPI Energy

Poor diversification

The 3 months correlation between Newhydrogen and SPI is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Newhydrogen and SPI Energy Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPI Energy and Newhydrogen 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 Newhydrogen are associated (or correlated) with SPI Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPI Energy has no effect on the direction of Newhydrogen i.e., Newhydrogen and SPI Energy go up and down completely randomly.

Pair Corralation between Newhydrogen and SPI Energy

Given the investment horizon of 90 days Newhydrogen is expected to generate 1.29 times less return on investment than SPI Energy. In addition to that, Newhydrogen is 2.58 times more volatile than SPI Energy Co. It trades about 0.07 of its total potential returns per unit of risk. SPI Energy Co is currently generating about 0.23 per unit of volatility. If you would invest  31.00  in SPI Energy Co on September 17, 2024 and sell it today you would earn a total of  7.74  from holding SPI Energy Co or generate 24.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Newhydrogen  vs.  SPI Energy Co

Newhydrogen

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Newhydrogen has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

SPI Energy

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SPI Energy Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, SPI Energy may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Newhydrogen and SPI Energy

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

The idea behind Newhydrogen and SPI Energy Co 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..