Correlation Between SolarEdge Technologies and Pixelworks

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

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

Diversification Opportunities for SolarEdge Technologies and Pixelworks

-0.1

Correlation Coefficient

SolarEdge Technologies  Pixelworks

Good diversification

The 3 months correlation between SolarEdge and Pixelworks is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding SolarEdge Technologies and Pixelworks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pixelworks and SolarEdge Technologies 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 SolarEdge Technologies are associated (or correlated) with Pixelworks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pixelworks has no effect on the direction of SolarEdge Technologies i.e., SolarEdge Technologies and Pixelworks go up and down completely randomly.

Pair Corralation between SolarEdge Technologies and Pixelworks

Given the investment horizon of 90 days SolarEdge Technologies is expected to generate 1.68 times more return on investment than Pixelworks. However, SolarEdge Technologies is 1.68 times more volatile than Pixelworks. It trades about 0.16 of its potential returns per unit of risk. Pixelworks is currently generating about 0.07 per unit of risk. If you would invest  1,278  in SolarEdge Technologies on October 7, 2024 and sell it today you would earn a total of  250.00  from holding SolarEdge Technologies or generate 19.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

SolarEdge Technologies  vs.  Pixelworks

SolarEdge Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SolarEdge Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pixelworks

Risk-Adjusted Performance

6 of 100

Modest

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

Pair Trading with SolarEdge Technologies and Pixelworks

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

The idea behind SolarEdge Technologies and Pixelworks 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.