Correlation Between First Solar and M Tron
Can any of the company-specific risk be diversified away by investing in both First Solar and M Tron 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 First Solar and M Tron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Solar and M tron Industries, you can compare the effects of market volatilities on First Solar and M Tron 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 First Solar with a short position of M Tron. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Solar and M Tron.
Diversification Opportunities for First Solar and M Tron
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between First and MPTI is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding First Solar and M tron Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on M tron Industries and First 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 First Solar are associated (or correlated) with M Tron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of M tron Industries has no effect on the direction of First Solar i.e., First Solar and M Tron go up and down completely randomly.
Pair Corralation between First Solar and M Tron
Given the investment horizon of 90 days First Solar is expected to under-perform the M Tron. But the stock apears to be less risky and, when comparing its historical volatility, First Solar is 1.12 times less risky than M Tron. The stock trades about -0.05 of its potential returns per unit of risk. The M tron Industries is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 4,945 in M tron Industries on August 24, 2024 and sell it today you would earn a total of 1,285 from holding M tron Industries or generate 25.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Solar vs. M tron Industries
Performance |
| Timeline |
| First Solar |
| M tron Industries |
First Solar and M Tron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Solar and M Tron
The main advantage of trading using opposite First Solar and M Tron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Solar position performs unexpectedly, M Tron 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 M Tron will offset losses from the drop in M Tron's long position.| First Solar vs. Enphase Energy | First Solar vs. Sunrun Inc | First Solar vs. Canadian Solar | First Solar vs. SolarEdge Technologies |
| M Tron vs. Ieh Corp | M Tron vs. Micropac Industries | M Tron vs. Deswell Industries | M Tron vs. Methode 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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