Correlation Between First Solar and Arteris

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

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

Diversification Opportunities for First Solar and Arteris

0.89

Correlation Coefficient

First Solar  Arteris

Very poor diversification

The 3 months correlation between First and Arteris is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding First Solar and Arteris in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arteris and First Solar 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 First Solar are associated (or correlated) with Arteris. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arteris has no effect on the direction of First Solar i.e., First Solar and Arteris go up and down completely randomly.

Pair Corralation between First Solar and Arteris

Given the investment horizon of 90 days First Solar is expected to generate 0.82 times more return on investment than Arteris. However, First Solar is 1.22 times less risky than Arteris. It trades about 0.14 of its potential returns per unit of risk. Arteris is currently generating about 0.02 per unit of risk. If you would invest  12,643  in First Solar on January 28, 2025 and sell it today you would earn a total of  1,543  from holding First Solar or generate 12.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.24%
Values	Daily Returns

First Solar  vs.  Arteris

First Solar

Risk-Adjusted Performance

Very Weak

Over the last 90 days First Solar has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest inconsistent performance, the Stock's essential indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Arteris

Risk-Adjusted Performance

Very Weak

Over the last 90 days Arteris has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's forward indicators remain relatively invariable which may send shares a bit higher in May 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with First Solar and Arteris

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

The idea behind First Solar and Arteris 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.