Correlation Between Solid Impact and Secure Energy

Can any of the company-specific risk be diversified away by investing in both Solid Impact and Secure Energy 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 Impact and Secure Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Solid Impact Investments and Secure Energy Services, you can compare the effects of market volatilities on Solid Impact and Secure Energy 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 Impact with a short position of Secure Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solid Impact and Secure Energy.

Diversification Opportunities for Solid Impact and Secure Energy

-0.39

Correlation Coefficient

Solid Impact  Secure Energy

Very good diversification

The 3 months correlation between Solid and Secure is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Solid Impact Investments and Secure Energy Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Secure Energy Services and Solid Impact 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 Impact Investments are associated (or correlated) with Secure Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Secure Energy Services has no effect on the direction of Solid Impact i.e., Solid Impact and Secure Energy go up and down completely randomly.

Pair Corralation between Solid Impact and Secure Energy

Assuming the 90 days trading horizon Solid Impact Investments is expected to under-perform the Secure Energy. In addition to that, Solid Impact is 3.04 times more volatile than Secure Energy Services. It trades about -0.13 of its total potential returns per unit of risk. Secure Energy Services is currently generating about 0.06 per unit of volatility. If you would invest  1,142  in Secure Energy Services on March 29, 2024 and sell it today you would earn a total of  57.00  from holding Secure Energy Services or generate 4.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Solid Impact Investments  vs.  Secure Energy Services

Solid Impact Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Solid Impact Investments has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in July 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Secure Energy Services

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Secure Energy Services are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Secure Energy is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Solid Impact and Secure Energy

The main advantage of trading using opposite Solid Impact and Secure Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solid Impact position performs unexpectedly, Secure Energy 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 Secure Energy will offset losses from the drop in Secure Energy's long position.

The idea behind Solid Impact Investments and Secure Energy Services 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.

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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.