Correlation Between Charles Schwab and Solowin Holdings

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

By analyzing existing cross correlation between The Charles Schwab and Solowin Holdings Ordinary, you can compare the effects of market volatilities on Charles Schwab and Solowin Holdings 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 Charles Schwab with a short position of Solowin Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charles Schwab and Solowin Holdings.

Diversification Opportunities for Charles Schwab and Solowin Holdings

0.56

Correlation Coefficient

Charles Schwab  Solowin Holdings

Very weak diversification

The 3 months correlation between Charles and Solowin is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding The Charles Schwab and Solowin Holdings Ordinary in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solowin Holdings Ordinary and Charles Schwab 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 The Charles Schwab are associated (or correlated) with Solowin Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solowin Holdings Ordinary has no effect on the direction of Charles Schwab i.e., Charles Schwab and Solowin Holdings go up and down completely randomly.

Pair Corralation between Charles Schwab and Solowin Holdings

Assuming the 90 days trading horizon Charles Schwab is expected to generate 9.24 times less return on investment than Solowin Holdings. But when comparing it to its historical volatility, The Charles Schwab is 11.81 times less risky than Solowin Holdings. It trades about 0.04 of its potential returns per unit of risk. Solowin Holdings Ordinary is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  608.00  in Solowin Holdings Ordinary on December 2, 2024 and sell it today you would lose (485.00) from holding Solowin Holdings Ordinary or give up 79.77% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	75.15%
Values	Daily Returns

The Charles Schwab  vs.  Solowin Holdings Ordinary

Charles Schwab

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Charles Schwab has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady forward-looking indicators, Charles Schwab is not utilizing all of its potentials. The latest stock price chaos, may contribute to medium-term losses for the stakeholders.

Solowin Holdings Ordinary

Risk-Adjusted Performance

Very Weak

Over the last 90 days Solowin Holdings Ordinary has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Etf's forward indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the ETF investors.

Pair Trading with Charles Schwab and Solowin Holdings

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

The idea behind The Charles Schwab and Solowin Holdings Ordinary 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.