Correlation Between Solomon Technology and FineMat Applied
Can any of the company-specific risk be diversified away by investing in both Solomon Technology and FineMat Applied 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 Solomon Technology and FineMat Applied into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solomon Technology Corp and FineMat Applied Materials, you can compare the effects of market volatilities on Solomon Technology and FineMat Applied 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 Solomon Technology with a short position of FineMat Applied. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solomon Technology and FineMat Applied.
Diversification Opportunities for Solomon Technology and FineMat Applied
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Solomon and FineMat is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Solomon Technology Corp and FineMat Applied Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FineMat Applied Materials and Solomon Technology 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 Solomon Technology Corp are associated (or correlated) with FineMat Applied. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FineMat Applied Materials has no effect on the direction of Solomon Technology i.e., Solomon Technology and FineMat Applied go up and down completely randomly.
Pair Corralation between Solomon Technology and FineMat Applied
Assuming the 90 days trading horizon Solomon Technology Corp is expected to generate 1.21 times more return on investment than FineMat Applied. However, Solomon Technology is 1.21 times more volatile than FineMat Applied Materials. It trades about 0.11 of its potential returns per unit of risk. FineMat Applied Materials is currently generating about 0.03 per unit of risk. If you would invest 2,680 in Solomon Technology Corp on August 30, 2024 and sell it today you would earn a total of 10,520 from holding Solomon Technology Corp or generate 392.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Solomon Technology Corp vs. FineMat Applied Materials
Performance |
| Timeline |
| Solomon Technology Corp |
| FineMat Applied Materials |
Solomon Technology and FineMat Applied Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solomon Technology and FineMat Applied
The main advantage of trading using opposite Solomon Technology and FineMat Applied positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solomon Technology position performs unexpectedly, FineMat Applied 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 FineMat Applied will offset losses from the drop in FineMat Applied's long position.| Solomon Technology vs. Qisda Corp | Solomon Technology vs. Inventec Corp | Solomon Technology vs. Mosel Vitelic | Solomon Technology vs. Ritek Corp |
| FineMat Applied vs. Hon Hai Precision | FineMat Applied vs. Delta Electronics | FineMat Applied vs. LARGAN Precision Co | FineMat Applied vs. E Ink Holdings |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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