Correlation Between SinglePoint and SPI Energy

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

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

Diversification Opportunities for SinglePoint and SPI Energy

-0.25

Correlation Coefficient

SinglePoint  SPI Energy

Very good diversification

The 3 months correlation between SinglePoint and SPI is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding SinglePoint and SPI Energy Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPI Energy and SinglePoint 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 SinglePoint are associated (or correlated) with SPI Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPI Energy has no effect on the direction of SinglePoint i.e., SinglePoint and SPI Energy go up and down completely randomly.

Pair Corralation between SinglePoint and SPI Energy

Given the investment horizon of 90 days SinglePoint is expected to under-perform the SPI Energy. In addition to that, SinglePoint is 1.98 times more volatile than SPI Energy Co. It trades about -0.06 of its total potential returns per unit of risk. SPI Energy Co is currently generating about 0.04 per unit of volatility. If you would invest  32.00  in SPI Energy Co on September 3, 2024 and sell it today you would lose (3.00) from holding SPI Energy Co or give up 9.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

SinglePoint  vs.  SPI Energy Co

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.

SPI Energy

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SPI Energy Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, SPI Energy demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SinglePoint and SPI Energy

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

The idea behind SinglePoint and SPI Energy Co 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.