Correlation Between Solar Applied and Evergreen Steel
Can any of the company-specific risk be diversified away by investing in both Solar Applied and Evergreen Steel 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 Applied and Evergreen Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solar Applied Materials and Evergreen Steel Corp, you can compare the effects of market volatilities on Solar Applied and Evergreen Steel 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 Applied with a short position of Evergreen Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solar Applied and Evergreen Steel.
Diversification Opportunities for Solar Applied and Evergreen Steel
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Solar and Evergreen is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Solar Applied Materials and Evergreen Steel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evergreen Steel Corp and Solar Applied 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 Applied Materials are associated (or correlated) with Evergreen Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evergreen Steel Corp has no effect on the direction of Solar Applied i.e., Solar Applied and Evergreen Steel go up and down completely randomly.
Pair Corralation between Solar Applied and Evergreen Steel
Assuming the 90 days trading horizon Solar Applied is expected to generate 1.86 times less return on investment than Evergreen Steel. But when comparing it to its historical volatility, Solar Applied Materials is 1.17 times less risky than Evergreen Steel. It trades about 0.1 of its potential returns per unit of risk. Evergreen Steel Corp is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 10,500 in Evergreen Steel Corp on March 1, 2024 and sell it today you would earn a total of 3,150 from holding Evergreen Steel Corp or generate 30.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Solar Applied Materials vs. Evergreen Steel Corp
Performance |
Timeline |
Solar Applied Materials |
Evergreen Steel Corp |
Solar Applied and Evergreen Steel Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Solar Applied and Evergreen Steel
The main advantage of trading using opposite Solar Applied and Evergreen Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solar Applied position performs unexpectedly, Evergreen Steel 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 Evergreen Steel will offset losses from the drop in Evergreen Steel's long position.Solar Applied vs. Catcher Technology Co | Solar Applied vs. Shin Zu Shing | Solar Applied vs. China Metal Products |
Evergreen Steel vs. Catcher Technology Co | Evergreen Steel vs. Shin Zu Shing | Evergreen Steel vs. China Metal Products |
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 CEOs Directory module to screen CEOs from public companies around the world.
Other Complementary Tools
Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities |