Correlation Between CSP and First Solar

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

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

Diversification Opportunities for CSP and First Solar

-0.42

Correlation Coefficient

CSP  First Solar

Very good diversification

The 3 months correlation between CSP and First is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding CSP Inc and First Solar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Solar and CSP 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 CSP Inc are associated (or correlated) with First Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Solar has no effect on the direction of CSP i.e., CSP and First Solar go up and down completely randomly.

Pair Corralation between CSP and First Solar

Given the investment horizon of 90 days CSP Inc is expected to under-perform the First Solar. But the stock apears to be less risky and, when comparing its historical volatility, CSP Inc is 1.04 times less risky than First Solar. The stock trades about -0.24 of its potential returns per unit of risk. The First Solar is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  16,548  in First Solar on May 9, 2025 and sell it today you would earn a total of  1,953  from holding First Solar or generate 11.8% return on investment over 90 days.

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

CSP Inc  vs.  First Solar

CSP Inc

Risk-Adjusted Performance

Weakest

Over the last 90 days CSP Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in September 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

First Solar

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in First Solar are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile essential indicators, First Solar reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CSP and First Solar

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

The idea behind CSP Inc and First Solar 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.