Correlation Between SMA Solar and Three Sixty

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

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

Diversification Opportunities for SMA Solar and Three Sixty

-0.24

Correlation Coefficient

SMA Solar  Three Sixty

Very good diversification

The 3 months correlation between SMA and Three is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding SMA Solar Technology and Three Sixty Solar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Three Sixty Solar and SMA Solar 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 SMA Solar Technology are associated (or correlated) with Three Sixty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Three Sixty Solar has no effect on the direction of SMA Solar i.e., SMA Solar and Three Sixty go up and down completely randomly.

Pair Corralation between SMA Solar and Three Sixty

Assuming the 90 days horizon SMA Solar is expected to generate 17.49 times less return on investment than Three Sixty. But when comparing it to its historical volatility, SMA Solar Technology is 21.29 times less risky than Three Sixty. It trades about 0.14 of its potential returns per unit of risk. Three Sixty Solar is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  0.01  in Three Sixty Solar on December 27, 2024 and sell it today you would earn a total of  0.00  from holding Three Sixty Solar or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

SMA Solar Technology  vs.  Three Sixty Solar

SMA Solar Technology

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SMA Solar Technology are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, SMA Solar showed solid returns over the last few months and may actually be approaching a breakup point.

Three Sixty Solar

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Three Sixty Solar are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak essential indicators, Three Sixty reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SMA Solar and Three Sixty

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

The idea behind SMA Solar Technology and Three Sixty Solar 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..