Correlation Between Solar Alliance and ABCO Energy

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

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

Diversification Opportunities for Solar Alliance and ABCO Energy

0.0

Correlation Coefficient

Solar Alliance  ABCO Energy

Pay attention - limited upside

The 3 months correlation between Solar and ABCO is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Solar Alliance Energy and ABCO Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABCO Energy and Solar Alliance 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 Solar Alliance Energy are associated (or correlated) with ABCO Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABCO Energy has no effect on the direction of Solar Alliance i.e., Solar Alliance and ABCO Energy go up and down completely randomly.

Pair Corralation between Solar Alliance and ABCO Energy

Assuming the 90 days horizon Solar Alliance Energy is expected to under-perform the ABCO Energy. But the otc stock apears to be less risky and, when comparing its historical volatility, Solar Alliance Energy is 16.36 times less risky than ABCO Energy. The otc stock trades about -0.06 of its potential returns per unit of risk. The ABCO Energy is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  0.01  in ABCO Energy on September 5, 2024 and sell it today you would earn a total of  0.00  from holding ABCO Energy or generate 0.0% return on investment over 90 days.

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

Solar Alliance Energy  vs.  ABCO Energy

Solar Alliance Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Solar Alliance Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

ABCO Energy

Risk-Adjusted Performance

8 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ABCO Energy are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, ABCO Energy exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Solar Alliance and ABCO Energy

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

The idea behind Solar Alliance Energy and ABCO 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.

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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 Commodity Directory module to find actively traded commodities issued by global exchanges.