Correlation Between Aquagold International and Solid Power

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

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

Diversification Opportunities for Aquagold International and Solid Power

0.0

Correlation Coefficient

Aquagold International  Solid Power

Pay attention - limited upside

The 3 months correlation between Aquagold and Solid is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Aquagold International and Solid Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solid Power and Aquagold International 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 Aquagold International are associated (or correlated) with Solid Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solid Power has no effect on the direction of Aquagold International i.e., Aquagold International and Solid Power go up and down completely randomly.

Pair Corralation between Aquagold International and Solid Power

Given the investment horizon of 90 days Aquagold International is expected to generate 10.32 times more return on investment than Solid Power. However, Aquagold International is 10.32 times more volatile than Solid Power. It trades about 0.06 of its potential returns per unit of risk. Solid Power is currently generating about -0.01 per unit of risk. If you would invest  21.00  in Aquagold International on September 16, 2024 and sell it today you would lose (20.40) from holding Aquagold International or give up 97.14% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Aquagold International  vs.  Solid Power

Aquagold International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aquagold International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Aquagold International is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Solid Power

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Solid Power has generated negative risk-adjusted returns adding no value to investors with long positions. Even with abnormal performance in the last few months, the Stock's fundamental indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Aquagold International and Solid Power

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

The idea behind Aquagold International and Solid Power 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.