Correlation Between Solar Alliance and Hamilton Enhanced

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

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

Diversification Opportunities for Solar Alliance and Hamilton Enhanced

-0.64

Correlation Coefficient

Solar Alliance  Hamilton Enhanced

Excellent diversification

The 3 months correlation between Solar and Hamilton is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Solar Alliance Energy and Hamilton Enhanced Canadian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hamilton Enhanced and Solar Alliance 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 Solar Alliance Energy are associated (or correlated) with Hamilton Enhanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hamilton Enhanced has no effect on the direction of Solar Alliance i.e., Solar Alliance and Hamilton Enhanced go up and down completely randomly.

Pair Corralation between Solar Alliance and Hamilton Enhanced

Assuming the 90 days trading horizon Solar Alliance Energy is expected to generate 9.52 times more return on investment than Hamilton Enhanced. However, Solar Alliance is 9.52 times more volatile than Hamilton Enhanced Canadian. It trades about 0.02 of its potential returns per unit of risk. Hamilton Enhanced Canadian is currently generating about 0.11 per unit of risk. If you would invest  8.00  in Solar Alliance Energy on August 31, 2024 and sell it today you would lose (4.50) from holding Solar Alliance Energy or give up 56.25% of portfolio value over 90 days.

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

Solar Alliance Energy  vs.  Hamilton Enhanced Canadian

Solar Alliance Energy

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Solar Alliance Energy are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal essential indicators, Solar Alliance showed solid returns over the last few months and may actually be approaching a breakup point.

Hamilton Enhanced

Risk-Adjusted Performance

30 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Hamilton Enhanced Canadian are ranked lower than 30 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Hamilton Enhanced displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Solar Alliance and Hamilton Enhanced

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

The idea behind Solar Alliance Energy and Hamilton Enhanced Canadian 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..