Correlation Between Solid Power and Enersys

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Can any of the company-specific risk be diversified away by investing in both Solid Power and Enersys 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 Solid Power and Enersys into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solid Power and Enersys, you can compare the effects of market volatilities on Solid Power and Enersys 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 Solid Power with a short position of Enersys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solid Power and Enersys.

Diversification Opportunities for Solid Power and Enersys

0.62
  Correlation Coefficient

Poor diversification

The 3 months correlation between Solid and Enersys is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Solid Power and Enersys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enersys and Solid Power 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 Solid Power are associated (or correlated) with Enersys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enersys has no effect on the direction of Solid Power i.e., Solid Power and Enersys go up and down completely randomly.

Pair Corralation between Solid Power and Enersys

Given the investment horizon of 90 days Solid Power is expected to under-perform the Enersys. In addition to that, Solid Power is 2.57 times more volatile than Enersys. It trades about -0.01 of its total potential returns per unit of risk. Enersys is currently generating about 0.04 per unit of volatility. If you would invest  7,304  in Enersys on September 6, 2024 and sell it today you would earn a total of  2,357  from holding Enersys or generate 32.27% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Solid Power  vs.  Enersys

 Performance 
       Timeline  
Solid Power 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 latest uncertain performance, the Stock's fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.
Enersys 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Enersys are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Enersys is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Solid Power and Enersys Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Solid Power and Enersys

The main advantage of trading using opposite Solid Power and Enersys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solid Power position performs unexpectedly, Enersys 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 Enersys will offset losses from the drop in Enersys' long position.
The idea behind Solid Power and Enersys 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.

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