Correlation Between EV Advanced and Solus Advanced
Can any of the company-specific risk be diversified away by investing in both EV Advanced and Solus Advanced 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 EV Advanced and Solus Advanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EV Advanced Material and Solus Advanced Materials, you can compare the effects of market volatilities on EV Advanced and Solus Advanced 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 EV Advanced with a short position of Solus Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of EV Advanced and Solus Advanced.
Diversification Opportunities for EV Advanced and Solus Advanced
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 131400 and Solus is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding EV Advanced Material and Solus Advanced Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solus Advanced Materials and EV Advanced 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 EV Advanced Material are associated (or correlated) with Solus Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solus Advanced Materials has no effect on the direction of EV Advanced i.e., EV Advanced and Solus Advanced go up and down completely randomly.
Pair Corralation between EV Advanced and Solus Advanced
Assuming the 90 days trading horizon EV Advanced is expected to generate 7.6 times less return on investment than Solus Advanced. But when comparing it to its historical volatility, EV Advanced Material is 3.18 times less risky than Solus Advanced. It trades about 0.1 of its potential returns per unit of risk. Solus Advanced Materials is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 882,000 in Solus Advanced Materials on October 23, 2024 and sell it today you would earn a total of 223,000 from holding Solus Advanced Materials or generate 25.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EV Advanced Material vs. Solus Advanced Materials
Performance |
| Timeline |
| EV Advanced Material |
| Solus Advanced Materials |
EV Advanced and Solus Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EV Advanced and Solus Advanced
The main advantage of trading using opposite EV Advanced and Solus Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EV Advanced position performs unexpectedly, Solus Advanced 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 Solus Advanced will offset losses from the drop in Solus Advanced's long position.| EV Advanced vs. Hannong Chemicals | EV Advanced vs. Wireless Power Amplifier | EV Advanced vs. Kukdong Oil Chemicals | EV Advanced vs. Samsung Publishing Co |
| Solus Advanced vs. SK IE Technology | Solus Advanced vs. DAEDUCK ELECTRONICS CoLtd | Solus Advanced vs. Iljin Display | Solus Advanced vs. Sungmoon Electronics Co |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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