Correlation Between Scatec Solar and Bonheur

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

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

Diversification Opportunities for Scatec Solar and Bonheur

0.66

Correlation Coefficient

Scatec Solar  Bonheur

Poor diversification

The 3 months correlation between Scatec and Bonheur is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Scatec Solar OL and Bonheur in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bonheur and Scatec Solar 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 Scatec Solar OL are associated (or correlated) with Bonheur. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bonheur has no effect on the direction of Scatec Solar i.e., Scatec Solar and Bonheur go up and down completely randomly.

Pair Corralation between Scatec Solar and Bonheur

Assuming the 90 days trading horizon Scatec Solar OL is expected to generate 1.38 times more return on investment than Bonheur. However, Scatec Solar is 1.38 times more volatile than Bonheur. It trades about 0.03 of its potential returns per unit of risk. Bonheur is currently generating about 0.04 per unit of risk. If you would invest  7,755  in Scatec Solar OL on September 4, 2024 and sell it today you would earn a total of  225.00  from holding Scatec Solar OL or generate 2.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Scatec Solar OL  vs.  Bonheur

Scatec Solar OL

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Scatec Solar OL are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Scatec Solar is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Bonheur

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bonheur are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Bonheur is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Scatec Solar and Bonheur

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

The idea behind Scatec Solar OL and Bonheur 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.