Correlation Between Aurora Solar and SMA Solar
Can any of the company-specific risk be diversified away by investing in both Aurora Solar and SMA Solar 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 Aurora Solar and SMA Solar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aurora Solar Technologies and SMA Solar Technology, you can compare the effects of market volatilities on Aurora Solar and SMA Solar 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 Aurora Solar with a short position of SMA Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurora Solar and SMA Solar.
Diversification Opportunities for Aurora Solar and SMA Solar
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Aurora and SMA is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Aurora Solar Technologies and SMA Solar Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SMA Solar Technology and Aurora Solar 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 Aurora Solar Technologies are associated (or correlated) with SMA Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SMA Solar Technology has no effect on the direction of Aurora Solar i.e., Aurora Solar and SMA Solar go up and down completely randomly.
Pair Corralation between Aurora Solar and SMA Solar
Assuming the 90 days horizon Aurora Solar Technologies is expected to generate 2.0 times more return on investment than SMA Solar. However, Aurora Solar is 2.0 times more volatile than SMA Solar Technology. It trades about 0.09 of its potential returns per unit of risk. SMA Solar Technology is currently generating about 0.05 per unit of risk. If you would invest 1.70 in Aurora Solar Technologies on November 4, 2024 and sell it today you would earn a total of 0.15 from holding Aurora Solar Technologies or generate 8.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aurora Solar Technologies vs. SMA Solar Technology
Performance |
| Timeline |
| Aurora Solar Technologies |
| SMA Solar Technology |
Aurora Solar and SMA Solar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aurora Solar and SMA Solar
The main advantage of trading using opposite Aurora Solar and SMA Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aurora Solar position performs unexpectedly, SMA Solar 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 SMA Solar will offset losses from the drop in SMA Solar's long position.| Aurora Solar vs. Xinyi Solar Holdings | Aurora Solar vs. Xinyi Solar Holdings | Aurora Solar vs. Nextracker Class A | Aurora Solar vs. TGI Solar Power |
| SMA Solar vs. Xinyi Solar Holdings | SMA Solar vs. Xinyi Solar Holdings | SMA Solar vs. SolarEdge Technologies | SMA Solar vs. Sunrun Inc |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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