Correlation Between Chagee Holdings and Solid Power

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

By analyzing existing cross correlation between Chagee Holdings Limited and Solid Power, you can compare the effects of market volatilities on Chagee Holdings and Solid Power 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 Chagee Holdings with a short position of Solid Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chagee Holdings and Solid Power.

Diversification Opportunities for Chagee Holdings and Solid Power

-0.77

Correlation Coefficient

Chagee Holdings  Solid Power

Pay attention - limited upside

The 3 months correlation between Chagee and Solid is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Chagee Holdings Limited and Solid Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solid Power and Chagee Holdings 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 Chagee Holdings Limited are associated (or correlated) with Solid Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solid Power has no effect on the direction of Chagee Holdings i.e., Chagee Holdings and Solid Power go up and down completely randomly.

Pair Corralation between Chagee Holdings and Solid Power

Considering the 90-day investment horizon Chagee Holdings Limited is expected to under-perform the Solid Power. But the stock apears to be less risky and, when comparing its historical volatility, Chagee Holdings Limited is 1.45 times less risky than Solid Power. The stock trades about -0.06 of its potential returns per unit of risk. The Solid Power is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest  114.00  in Solid Power on April 24, 2025 and sell it today you would earn a total of  290.00  from holding Solid Power or generate 254.39% return on investment over 90 days.

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

Chagee Holdings Limited  vs.  Solid Power

Chagee Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Chagee Holdings Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical indicators remain somewhat strong which may send shares a bit higher in August 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Solid Power

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Solid Power are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain fundamental indicators, Solid Power reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chagee Holdings and Solid Power

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

The idea behind Chagee Holdings Limited and Solid Power 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.