Correlation Between SunPower and Newhydrogen

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

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

Diversification Opportunities for SunPower and Newhydrogen

0.88

Correlation Coefficient

SunPower  Newhydrogen

Very poor diversification

The 3 months correlation between SunPower and Newhydrogen is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding SunPower and Newhydrogen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newhydrogen 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 Newhydrogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newhydrogen has no effect on the direction of SunPower i.e., SunPower and Newhydrogen go up and down completely randomly.

Pair Corralation between SunPower and Newhydrogen

If you would invest (100.00) in SunPower on September 16, 2024 and sell it today you would earn a total of  100.00  from holding SunPower or generate -100.0% return on investment over 90 days.

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

SunPower  vs.  Newhydrogen

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.

Newhydrogen

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Newhydrogen has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with SunPower and Newhydrogen

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

The idea behind SunPower and Newhydrogen 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.