Correlation Between Coastal Capital and Solar Energy

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

By analyzing existing cross correlation between Coastal Capital Acq and Solar Energy Initiat, you can compare the effects of market volatilities on Coastal Capital and Solar 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 Coastal Capital with a short position of Solar Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coastal Capital and Solar Energy.

Diversification Opportunities for Coastal Capital and Solar Energy

-0.21

Correlation Coefficient

Coastal Capital  Solar Energy

Very good diversification

The 3 months correlation between Coastal and Solar is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Coastal Capital Acq and Solar Energy Initiat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solar Energy Initiat and Coastal Capital 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 Coastal Capital Acq are associated (or correlated) with Solar Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solar Energy Initiat has no effect on the direction of Coastal Capital i.e., Coastal Capital and Solar Energy go up and down completely randomly.

Pair Corralation between Coastal Capital and Solar Energy

Given the investment horizon of 90 days Coastal Capital is expected to generate 4.46 times less return on investment than Solar Energy. But when comparing it to its historical volatility, Coastal Capital Acq is 1.44 times less risky than Solar Energy. It trades about 0.06 of its potential returns per unit of risk. Solar Energy Initiat is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  0.01  in Solar Energy Initiat on September 10, 2025 and sell it today you would earn a total of  0.03  from holding Solar Energy Initiat or generate 300.0% return on investment over 90 days.

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

Coastal Capital Acq  vs.  Solar Energy Initiat

Coastal Capital Acq

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Coastal Capital Acq are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Coastal Capital revealed solid returns over the last few months and may actually be approaching a breakup point.

Solar Energy Initiat

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Solar Energy Initiat are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Solar Energy showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Coastal Capital and Solar Energy

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

The idea behind Coastal Capital Acq and Solar Energy Initiat 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.

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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.