Correlation Between Solaria Energa and Audax Renovables

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

By analyzing existing cross correlation between Solaria Energa y and Audax Renovables SA, you can compare the effects of market volatilities on Solaria Energa and Audax Renovables 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 Solaria Energa with a short position of Audax Renovables. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solaria Energa and Audax Renovables.

Diversification Opportunities for Solaria Energa and Audax Renovables

0.53

Correlation Coefficient

Solaria Energa  Audax Renovables

Very weak diversification

The 3 months correlation between Solaria and Audax is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Solaria Energa y and Audax Renovables SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Audax Renovables and Solaria Energa 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 Solaria Energa y are associated (or correlated) with Audax Renovables. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Audax Renovables has no effect on the direction of Solaria Energa i.e., Solaria Energa and Audax Renovables go up and down completely randomly.

Pair Corralation between Solaria Energa and Audax Renovables

Assuming the 90 days trading horizon Solaria Energa y is expected to under-perform the Audax Renovables. In addition to that, Solaria Energa is 1.32 times more volatile than Audax Renovables SA. It trades about -0.05 of its total potential returns per unit of risk. Audax Renovables SA is currently generating about -0.03 per unit of volatility. If you would invest  157.00  in Audax Renovables SA on December 30, 2024 and sell it today you would lose (6.00) from holding Audax Renovables SA or give up 3.82% of portfolio value over 90 days.

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

Solaria Energa y  vs.  Audax Renovables SA

Solaria Energa y

Risk-Adjusted Performance

Very Weak

Over the last 90 days Solaria Energa y has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Audax Renovables

Risk-Adjusted Performance

Very Weak

Over the last 90 days Audax Renovables SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Audax Renovables is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Solaria Energa and Audax Renovables

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

The idea behind Solaria Energa y and Audax Renovables SA 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..