Correlation Between Super Energy and Solartron Public

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

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

Diversification Opportunities for Super Energy and Solartron Public

0.74

Correlation Coefficient

Super Energy  Solartron Public

Poor diversification

The 3 months correlation between Super and Solartron is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Super Energy and Solartron Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solartron Public and Super Energy 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 Super Energy are associated (or correlated) with Solartron Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solartron Public has no effect on the direction of Super Energy i.e., Super Energy and Solartron Public go up and down completely randomly.

Pair Corralation between Super Energy and Solartron Public

Assuming the 90 days trading horizon Super Energy is expected to generate 1.0 times more return on investment than Solartron Public. However, Super Energy is 1.0 times less risky than Solartron Public. It trades about -0.03 of its potential returns per unit of risk. Solartron Public is currently generating about -0.08 per unit of risk. If you would invest  28.00  in Super Energy on September 17, 2024 and sell it today you would lose (2.00) from holding Super Energy or give up 7.14% of portfolio value over 90 days.

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

Super Energy  vs.  Solartron Public

Super Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Super Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Super Energy is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Solartron Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Solartron Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Super Energy and Solartron Public

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

The idea behind Super Energy and Solartron Public 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.