Correlation Between Solid Power and AMPX WT

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

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

Diversification Opportunities for Solid Power and AMPX WT

-0.44

Correlation Coefficient

Solid Power  AMPX WT

Very good diversification

The 3 months correlation between Solid and AMPX is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Solid Power and AMPX WT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMPX WT and Solid Power 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 Solid Power are associated (or correlated) with AMPX WT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMPX WT has no effect on the direction of Solid Power i.e., Solid Power and AMPX WT go up and down completely randomly.

Pair Corralation between Solid Power and AMPX WT

Assuming the 90 days horizon Solid Power is expected to generate 1.61 times more return on investment than AMPX WT. However, Solid Power is 1.61 times more volatile than AMPX WT. It trades about 0.28 of its potential returns per unit of risk. AMPX WT is currently generating about 0.35 per unit of risk. If you would invest  11.00  in Solid Power on October 9, 2024 and sell it today you would earn a total of  21.00  from holding Solid Power or generate 190.91% return on investment over 90 days.

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

Solid Power  vs.  AMPX WT

Solid Power

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Solid Power are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Solid Power showed solid returns over the last few months and may actually be approaching a breakup point.

AMPX WT

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in AMPX WT are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, AMPX WT unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Solid Power and AMPX WT

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

The idea behind Solid Power and AMPX WT 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.