Correlation Between Acorn Energy and Coherent

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

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

Diversification Opportunities for Acorn Energy and Coherent

-0.45

Correlation Coefficient

Acorn Energy  Coherent

Very good diversification

The 3 months correlation between Acorn and Coherent is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Acorn Energy and Coherent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coherent and Acorn Energy 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 Acorn Energy are associated (or correlated) with Coherent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coherent has no effect on the direction of Acorn Energy i.e., Acorn Energy and Coherent go up and down completely randomly.

Pair Corralation between Acorn Energy and Coherent

If you would invest  7,795  in Coherent on August 30, 2024 and sell it today you would earn a total of  2,014  from holding Coherent or generate 25.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.59%
Values	Daily Returns

Acorn Energy  vs.  Coherent

Acorn Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Acorn Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Acorn Energy is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Coherent

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Coherent are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent technical indicators, Coherent reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Acorn Energy and Coherent

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

The idea behind Acorn Energy and Coherent 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.