Correlation Between Solid Power and Emeren
Can any of the company-specific risk be diversified away by investing in both Solid Power and Emeren 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 Solid Power and Emeren into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solid Power and Emeren Group, you can compare the effects of market volatilities on Solid Power and Emeren 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 Solid Power with a short position of Emeren. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solid Power and Emeren.
Diversification Opportunities for Solid Power and Emeren
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Solid and Emeren is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Solid Power and Emeren Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emeren Group and Solid Power 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 Solid Power are associated (or correlated) with Emeren. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emeren Group has no effect on the direction of Solid Power i.e., Solid Power and Emeren go up and down completely randomly.
Pair Corralation between Solid Power and Emeren
Assuming the 90 days horizon Solid Power is expected to generate 2.48 times more return on investment than Emeren. However, Solid Power is 2.48 times more volatile than Emeren Group. It trades about 0.06 of its potential returns per unit of risk. Emeren Group is currently generating about -0.25 per unit of risk. If you would invest 9.10 in Solid Power on August 27, 2024 and sell it today you would earn a total of 0.00 from holding Solid Power or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solid Power vs. Emeren Group
Performance |
| Timeline |
| Solid Power |
| Emeren Group |
Solid Power and Emeren Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solid Power and Emeren
The main advantage of trading using opposite Solid Power and Emeren positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solid Power position performs unexpectedly, Emeren 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 Emeren will offset losses from the drop in Emeren's long position.The idea behind Solid Power and Emeren Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Emeren vs. Canadian Solar | Emeren vs. Maxeon Solar Technologies | Emeren vs. SolarEdge Technologies | Emeren vs. Sunnova Energy International |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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