Correlation Between SunPower and SunHydrogen

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

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

Diversification Opportunities for SunPower and SunHydrogen

0.51

Correlation Coefficient

SunPower  SunHydrogen

Very weak diversification

The 3 months correlation between SunPower and SunHydrogen is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding SunPower and SunHydrogen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SunHydrogen and SunPower 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 SunPower are associated (or correlated) with SunHydrogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SunHydrogen has no effect on the direction of SunPower i.e., SunPower and SunHydrogen go up and down completely randomly.

Pair Corralation between SunPower and SunHydrogen

If you would invest  1.80  in SunHydrogen on September 16, 2024 and sell it today you would earn a total of  0.60  from holding SunHydrogen or generate 33.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	0.0%
Values	Daily Returns

SunPower  vs.  SunHydrogen

SunPower

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SunPower has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, SunPower is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

SunHydrogen

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SunHydrogen has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unsteady performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with SunPower and SunHydrogen

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

The idea behind SunPower and SunHydrogen 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.

Check out your portfolio center.

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 Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.