Correlation Between Solution Financial and Converge Technology
Can any of the company-specific risk be diversified away by investing in both Solution Financial and Converge Technology 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 Solution Financial and Converge Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solution Financial and Converge Technology Solutions, you can compare the effects of market volatilities on Solution Financial and Converge Technology 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 Solution Financial with a short position of Converge Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solution Financial and Converge Technology.
Diversification Opportunities for Solution Financial and Converge Technology
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Solution and Converge is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Solution Financial and Converge Technology Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Converge Technology and Solution Financial 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 Solution Financial are associated (or correlated) with Converge Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Converge Technology has no effect on the direction of Solution Financial i.e., Solution Financial and Converge Technology go up and down completely randomly.
Pair Corralation between Solution Financial and Converge Technology
Assuming the 90 days trading horizon Solution Financial is expected to generate 0.81 times more return on investment than Converge Technology. However, Solution Financial is 1.24 times less risky than Converge Technology. It trades about 0.01 of its potential returns per unit of risk. Converge Technology Solutions is currently generating about -0.05 per unit of risk. If you would invest 28.00 in Solution Financial on September 20, 2024 and sell it today you would earn a total of 0.00 from holding Solution Financial or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solution Financial vs. Converge Technology Solutions
Performance |
| Timeline |
| Solution Financial |
| Converge Technology |
Solution Financial and Converge Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solution Financial and Converge Technology
The main advantage of trading using opposite Solution Financial and Converge Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solution Financial position performs unexpectedly, Converge Technology 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 Converge Technology will offset losses from the drop in Converge Technology's long position.| Solution Financial vs. Profound Medical Corp | Solution Financial vs. Constellation Software | Solution Financial vs. Converge Technology Solutions | Solution Financial vs. Diamond Estates Wines |
| Converge Technology vs. Dye Durham | Converge Technology vs. Docebo Inc | Converge Technology vs. Topicus | Converge Technology vs. goeasy |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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