Correlation Between Solar Alliance and Therma Bright
Can any of the company-specific risk be diversified away by investing in both Solar Alliance and Therma Bright 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 Therma Bright 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 Therma Bright, you can compare the effects of market volatilities on Solar Alliance and Therma Bright 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 Therma Bright. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solar Alliance and Therma Bright.
Diversification Opportunities for Solar Alliance and Therma Bright
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Solar and Therma is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Solar Alliance Energy and Therma Bright in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Therma Bright 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 Therma Bright. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Therma Bright has no effect on the direction of Solar Alliance i.e., Solar Alliance and Therma Bright go up and down completely randomly.
Pair Corralation between Solar Alliance and Therma Bright
Assuming the 90 days trading horizon Solar Alliance is expected to generate 10.59 times less return on investment than Therma Bright. But when comparing it to its historical volatility, Solar Alliance Energy is 2.65 times less risky than Therma Bright. It trades about 0.03 of its potential returns per unit of risk. Therma Bright is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 3.50 in Therma Bright on November 3, 2024 and sell it today you would earn a total of 0.50 from holding Therma Bright or generate 14.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solar Alliance Energy vs. Therma Bright
Performance |
| Timeline |
| Solar Alliance Energy |
| Therma Bright |
Solar Alliance and Therma Bright Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solar Alliance and Therma Bright
The main advantage of trading using opposite Solar Alliance and Therma Bright positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solar Alliance position performs unexpectedly, Therma Bright 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 Therma Bright will offset losses from the drop in Therma Bright's long position.| Solar Alliance vs. Braille Energy Systems | Solar Alliance vs. Therma Bright | Solar Alliance vs. CryptoStar Corp | Solar Alliance vs. Manganese X Energy |
| Therma Bright vs. Solar Alliance Energy | Therma Bright vs. Braille Energy Systems | Therma Bright vs. MedMira | Therma Bright vs. Lite Access 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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