Correlation Between Solar Alliance and American Manganese
Can any of the company-specific risk be diversified away by investing in both Solar Alliance and American Manganese 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 Solar Alliance and American Manganese into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solar Alliance Energy and American Manganese, you can compare the effects of market volatilities on Solar Alliance and American Manganese 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 Solar Alliance with a short position of American Manganese. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solar Alliance and American Manganese.
Diversification Opportunities for Solar Alliance and American Manganese
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Solar and American is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Solar Alliance Energy and American Manganese in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Manganese and Solar Alliance 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 Solar Alliance Energy are associated (or correlated) with American Manganese. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Manganese has no effect on the direction of Solar Alliance i.e., Solar Alliance and American Manganese go up and down completely randomly.
Pair Corralation between Solar Alliance and American Manganese
Assuming the 90 days trading horizon Solar Alliance is expected to generate 10.23 times less return on investment than American Manganese. In addition to that, Solar Alliance is 1.62 times more volatile than American Manganese. It trades about 0.02 of its total potential returns per unit of risk. American Manganese is currently generating about 0.28 per unit of volatility. If you would invest 9.00 in American Manganese on August 31, 2024 and sell it today you would earn a total of 5.00 from holding American Manganese or generate 55.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solar Alliance Energy vs. American Manganese
Performance |
| Timeline |
| Solar Alliance Energy |
| American Manganese |
Solar Alliance and American Manganese Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solar Alliance and American Manganese
The main advantage of trading using opposite Solar Alliance and American Manganese positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solar Alliance position performs unexpectedly, American Manganese 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 American Manganese will offset losses from the drop in American Manganese's long position.| Solar Alliance vs. Mene Inc | Solar Alliance vs. Africa Oil Corp | Solar Alliance vs. Financial 15 Split | Solar Alliance vs. Rubicon Organics |
| American Manganese vs. Solar Alliance Energy | American Manganese vs. Global X Active | American Manganese vs. Financial 15 Split | American Manganese vs. Rubicon Organics |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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