Correlation Between Solar Alliance and CHAR Technologies
Can any of the company-specific risk be diversified away by investing in both Solar Alliance and CHAR Technologies 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 CHAR Technologies 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 CHAR Technologies, you can compare the effects of market volatilities on Solar Alliance and CHAR Technologies 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 CHAR Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solar Alliance and CHAR Technologies.
Diversification Opportunities for Solar Alliance and CHAR Technologies
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Solar and CHAR is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Solar Alliance Energy and CHAR Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHAR Technologies 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 CHAR Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHAR Technologies has no effect on the direction of Solar Alliance i.e., Solar Alliance and CHAR Technologies go up and down completely randomly.
Pair Corralation between Solar Alliance and CHAR Technologies
Assuming the 90 days trading horizon Solar Alliance Energy is expected to generate 2.77 times more return on investment than CHAR Technologies. However, Solar Alliance is 2.77 times more volatile than CHAR Technologies. It trades about 0.02 of its potential returns per unit of risk. CHAR Technologies is currently generating about -0.07 per unit of risk. If you would invest 4.00 in Solar Alliance Energy on August 28, 2024 and sell it today you would lose (0.50) from holding Solar Alliance Energy or give up 12.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solar Alliance Energy vs. CHAR Technologies
Performance |
| Timeline |
| Solar Alliance Energy |
| CHAR Technologies |
Solar Alliance and CHAR Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solar Alliance and CHAR Technologies
The main advantage of trading using opposite Solar Alliance and CHAR Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solar Alliance position performs unexpectedly, CHAR Technologies 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 CHAR Technologies will offset losses from the drop in CHAR Technologies' long position.| Solar Alliance vs. Braille Energy Systems | Solar Alliance vs. Therma Bright | Solar Alliance vs. CryptoStar Corp | Solar Alliance vs. Manganese X Energy |
| CHAR Technologies vs. Environmental Waste International | CHAR Technologies vs. Eguana Technologies | CHAR Technologies vs. Thermal 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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