Correlation Between South Jersey and Solar Alliance

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

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

Diversification Opportunities for South Jersey and Solar Alliance

0.64

Correlation Coefficient

South Jersey  Solar Alliance

Poor diversification

The 3 months correlation between South and Solar is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding South Jersey Industries 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 South Jersey 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 South Jersey Industries 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 South Jersey i.e., South Jersey and Solar Alliance go up and down completely randomly.

Pair Corralation between South Jersey and Solar Alliance

If you would invest  6,745  in South Jersey Industries on September 17, 2024 and sell it today you would earn a total of  0.00  from holding South Jersey Industries or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	5.0%
Values	Daily Returns

South Jersey Industries  vs.  Solar Alliance Energy

South Jersey Industries

Risk-Adjusted Performance

0 of 100

Very Weak

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

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.

Pair Trading with South Jersey and Solar Alliance

The main advantage of trading using opposite South Jersey and Solar Alliance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if South Jersey 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 South Jersey Industries 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.

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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.