Correlation Between Aehr Test and First Solar
Can any of the company-specific risk be diversified away by investing in both Aehr Test and First 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 Aehr Test and First Solar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aehr Test Systems and First Solar, you can compare the effects of market volatilities on Aehr Test and First 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 Aehr Test with a short position of First Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aehr Test and First Solar.
Diversification Opportunities for Aehr Test and First Solar
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Aehr and First is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Aehr Test Systems and First Solar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Solar and Aehr Test 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 Aehr Test Systems are associated (or correlated) with First Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Solar has no effect on the direction of Aehr Test i.e., Aehr Test and First Solar go up and down completely randomly.
Pair Corralation between Aehr Test and First Solar
Given the investment horizon of 90 days Aehr Test Systems is expected to under-perform the First Solar. In addition to that, Aehr Test is 2.78 times more volatile than First Solar. It trades about -0.2 of its total potential returns per unit of risk. First Solar is currently generating about -0.18 per unit of volatility. If you would invest 18,647 in First Solar on November 3, 2024 and sell it today you would lose (1,895) from holding First Solar or give up 10.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aehr Test Systems vs. First Solar
Performance |
| Timeline |
| Aehr Test Systems |
| First Solar |
Aehr Test and First Solar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aehr Test and First Solar
The main advantage of trading using opposite Aehr Test and First Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aehr Test position performs unexpectedly, First 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 First Solar will offset losses from the drop in First Solar's long position.| Aehr Test vs. Photronics | Aehr Test vs. Lam Research Corp | Aehr Test vs. KLA Tencor | Aehr Test vs. Kulicke and Soffa |
| First Solar vs. Enphase Energy | First Solar vs. Sunrun Inc | First Solar vs. Canadian Solar | First Solar vs. SolarEdge Technologies |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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