Correlation Between Solid Power and Com7 PCL

Can any of the company-specific risk be diversified away by investing in both Solid Power and Com7 PCL 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 Solid Power and Com7 PCL into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Solid Power and Com7 PCL, you can compare the effects of market volatilities on Solid Power and Com7 PCL 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 Solid Power with a short position of Com7 PCL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solid Power and Com7 PCL.

Diversification Opportunities for Solid Power and Com7 PCL

0.73

Correlation Coefficient

Solid Power  Com7 PCL

Poor diversification

The 3 months correlation between Solid and Com7 is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Solid Power and Com7 PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Com7 PCL and Solid Power 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 Solid Power are associated (or correlated) with Com7 PCL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Com7 PCL has no effect on the direction of Solid Power i.e., Solid Power and Com7 PCL go up and down completely randomly.

Pair Corralation between Solid Power and Com7 PCL

Given the investment horizon of 90 days Solid Power is expected to generate 3.63 times more return on investment than Com7 PCL. However, Solid Power is 3.63 times more volatile than Com7 PCL. It trades about 0.22 of its potential returns per unit of risk. Com7 PCL is currently generating about 0.18 per unit of risk. If you would invest  166.00  in Solid Power on May 25, 2025 and sell it today you would earn a total of  266.00  from holding Solid Power or generate 160.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.16%
Values	Daily Returns

Solid Power  vs.  Com7 PCL

Solid Power

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Solid Power are ranked lower than 17 (%) 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.

Com7 PCL

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Com7 PCL are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward-looking signals, Com7 PCL disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Solid Power and Com7 PCL

The main advantage of trading using opposite Solid Power and Com7 PCL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solid Power position performs unexpectedly, Com7 PCL 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 Com7 PCL will offset losses from the drop in Com7 PCL's long position.

The idea behind Solid Power and Com7 PCL 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.