Correlation Between Solid Power and Tritium DCFC

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

By analyzing existing cross correlation between Solid Power and Tritium DCFC Limited, you can compare the effects of market volatilities on Solid Power and Tritium DCFC 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 Tritium DCFC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solid Power and Tritium DCFC.

Diversification Opportunities for Solid Power and Tritium DCFC

0.13

Correlation Coefficient

Solid Power  Tritium DCFC

Average diversification

The 3 months correlation between Solid and Tritium is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Solid Power and Tritium DCFC Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tritium DCFC Limited 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 Tritium DCFC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tritium DCFC Limited has no effect on the direction of Solid Power i.e., Solid Power and Tritium DCFC go up and down completely randomly.

Pair Corralation between Solid Power and Tritium DCFC

If you would invest  20.00  in Solid Power on September 15, 2024 and sell it today you would lose (10.00) from holding Solid Power or give up 50.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	6.35%
Values	Daily Returns

Solid Power  vs.  Tritium DCFC Limited

Solid Power

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Solid Power are ranked lower than 1 (%) 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.

Tritium DCFC Limited

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Solid Power and Tritium DCFC

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

The idea behind Solid Power and Tritium DCFC Limited 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.