Correlation Between Solar Applied and Catcher Technology
Can any of the company-specific risk be diversified away by investing in both Solar Applied and Catcher Technology 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 Solar Applied and Catcher Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solar Applied Materials and Catcher Technology Co, you can compare the effects of market volatilities on Solar Applied and Catcher Technology 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 Solar Applied with a short position of Catcher Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solar Applied and Catcher Technology.
Diversification Opportunities for Solar Applied and Catcher Technology
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Solar and Catcher is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Solar Applied Materials and Catcher Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catcher Technology and Solar Applied 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 Solar Applied Materials are associated (or correlated) with Catcher Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catcher Technology has no effect on the direction of Solar Applied i.e., Solar Applied and Catcher Technology go up and down completely randomly.
Pair Corralation between Solar Applied and Catcher Technology
Assuming the 90 days trading horizon Solar Applied Materials is expected to generate 1.17 times more return on investment than Catcher Technology. However, Solar Applied is 1.17 times more volatile than Catcher Technology Co. It trades about -0.17 of its potential returns per unit of risk. Catcher Technology Co is currently generating about -0.35 per unit of risk. If you would invest 6,620 in Solar Applied Materials on August 24, 2024 and sell it today you would lose (570.00) from holding Solar Applied Materials or give up 8.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solar Applied Materials vs. Catcher Technology Co
Performance |
| Timeline |
| Solar Applied Materials |
| Catcher Technology |
Solar Applied and Catcher Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solar Applied and Catcher Technology
The main advantage of trading using opposite Solar Applied and Catcher Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solar Applied position performs unexpectedly, Catcher Technology 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 Catcher Technology will offset losses from the drop in Catcher Technology's long position.| Solar Applied vs. Wafer Works | Solar Applied vs. Sino American Silicon Products | Solar Applied vs. StShine Optical Co | Solar Applied vs. Phison Electronics |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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