Correlation Between Solus Advanced and RF Materials
Can any of the company-specific risk be diversified away by investing in both Solus Advanced and RF Materials 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 Solus Advanced and RF Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solus Advanced Materials and RF Materials Co, you can compare the effects of market volatilities on Solus Advanced and RF Materials 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 Solus Advanced with a short position of RF Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solus Advanced and RF Materials.
Diversification Opportunities for Solus Advanced and RF Materials
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Solus and 327260 is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Solus Advanced Materials and RF Materials Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RF Materials and Solus 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 Solus Advanced Materials are associated (or correlated) with RF Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RF Materials has no effect on the direction of Solus Advanced i.e., Solus Advanced and RF Materials go up and down completely randomly.
Pair Corralation between Solus Advanced and RF Materials
Assuming the 90 days trading horizon Solus Advanced Materials is expected to generate 1.37 times more return on investment than RF Materials. However, Solus Advanced is 1.37 times more volatile than RF Materials Co. It trades about -0.02 of its potential returns per unit of risk. RF Materials Co is currently generating about -0.05 per unit of risk. If you would invest 2,060,000 in Solus Advanced Materials on October 27, 2024 and sell it today you would lose (1,072,000) from holding Solus Advanced Materials or give up 52.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solus Advanced Materials vs. RF Materials Co
Performance |
| Timeline |
| Solus Advanced Materials |
| RF Materials |
Solus Advanced and RF Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solus Advanced and RF Materials
The main advantage of trading using opposite Solus Advanced and RF Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solus Advanced position performs unexpectedly, RF Materials 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 RF Materials will offset losses from the drop in RF Materials' long position.| Solus Advanced vs. Solution Advanced Technology | Solus Advanced vs. Dongwoon Anatech Co | Solus Advanced vs. Raontech | Solus Advanced vs. NewFlex Technology Co |
| RF Materials vs. SK Hynix | RF Materials vs. LX Semicon Co | RF Materials vs. Tokai Carbon Korea | RF Materials vs. People Technology |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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