Correlation Between Solar Alliance and SinglePoint

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

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

Diversification Opportunities for Solar Alliance and SinglePoint

0.58

Correlation Coefficient

Solar Alliance  SinglePoint

Very weak diversification

The 3 months correlation between Solar and SinglePoint is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Solar Alliance Energy and SinglePoint in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SinglePoint and Solar Alliance 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 Solar Alliance Energy are associated (or correlated) with SinglePoint. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SinglePoint has no effect on the direction of Solar Alliance i.e., Solar Alliance and SinglePoint go up and down completely randomly.

Pair Corralation between Solar Alliance and SinglePoint

Assuming the 90 days horizon Solar Alliance Energy is expected to generate 0.32 times more return on investment than SinglePoint. However, Solar Alliance Energy is 3.08 times less risky than SinglePoint. It trades about -0.02 of its potential returns per unit of risk. SinglePoint is currently generating about -0.06 per unit of risk. If you would invest  3.47  in Solar Alliance Energy on September 4, 2024 and sell it today you would lose (0.96) from holding Solar Alliance Energy or give up 27.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.88%
Values	Daily Returns

Solar Alliance Energy  vs.  SinglePoint

Solar Alliance Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Solar Alliance Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

SinglePoint

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SinglePoint has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Solar Alliance and SinglePoint

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

The idea behind Solar Alliance Energy and SinglePoint 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.