Correlation Between Sesoda Corp and Solid State

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

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

Diversification Opportunities for Sesoda Corp and Solid State

-0.44

Correlation Coefficient

Sesoda Corp  Solid State

Very good diversification

The 3 months correlation between Sesoda and Solid is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Sesoda Corp and Solid State System in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solid State System and Sesoda Corp 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 Sesoda Corp are associated (or correlated) with Solid State. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solid State System has no effect on the direction of Sesoda Corp i.e., Sesoda Corp and Solid State go up and down completely randomly.

Pair Corralation between Sesoda Corp and Solid State

Assuming the 90 days trading horizon Sesoda Corp is expected to generate 0.81 times more return on investment than Solid State. However, Sesoda Corp is 1.23 times less risky than Solid State. It trades about 0.06 of its potential returns per unit of risk. Solid State System is currently generating about -0.04 per unit of risk. If you would invest  3,945  in Sesoda Corp on September 3, 2024 and sell it today you would earn a total of  235.00  from holding Sesoda Corp or generate 5.96% return on investment over 90 days.

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

Sesoda Corp  vs.  Solid State System

Sesoda Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sesoda Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Sesoda Corp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Solid State System

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Solid State System has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Solid State is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Sesoda Corp and Solid State

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

The idea behind Sesoda Corp and Solid State System 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.