Correlation Between InTest and SolarEdge Technologies

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

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

Diversification Opportunities for InTest and SolarEdge Technologies

0.73

Correlation Coefficient

InTest  SolarEdge Technologies

Poor diversification

The 3 months correlation between InTest and SolarEdge is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding inTest and SolarEdge Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SolarEdge Technologies and InTest 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 inTest are associated (or correlated) with SolarEdge Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SolarEdge Technologies has no effect on the direction of InTest i.e., InTest and SolarEdge Technologies go up and down completely randomly.

Pair Corralation between InTest and SolarEdge Technologies

Given the investment horizon of 90 days InTest is expected to generate 4.62 times less return on investment than SolarEdge Technologies. But when comparing it to its historical volatility, inTest is 2.45 times less risky than SolarEdge Technologies. It trades about 0.1 of its potential returns per unit of risk. SolarEdge Technologies is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  1,254  in SolarEdge Technologies on May 1, 2025 and sell it today you would earn a total of  1,327  from holding SolarEdge Technologies or generate 105.82% return on investment over 90 days.

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

inTest  vs.  SolarEdge Technologies

inTest

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in inTest are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, InTest unveiled solid returns over the last few months and may actually be approaching a breakup point.

SolarEdge Technologies

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SolarEdge Technologies are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent fundamental indicators, SolarEdge Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with InTest and SolarEdge Technologies

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

The idea behind inTest and SolarEdge Technologies 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.