Correlation Between Solar Enertech and Formcap Corp

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

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

Diversification Opportunities for Solar Enertech and Formcap Corp

1.0

Correlation Coefficient

Solar Enertech  Formcap Corp

No risk reduction

The 3 months correlation between Solar and Formcap is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Solar Enertech Corp and Formcap Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Formcap Corp and Solar Enertech 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 Solar Enertech Corp are associated (or correlated) with Formcap Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Formcap Corp has no effect on the direction of Solar Enertech i.e., Solar Enertech and Formcap Corp go up and down completely randomly.

Pair Corralation between Solar Enertech and Formcap Corp

If you would invest  0.21  in Formcap Corp on August 8, 2025 and sell it today you would earn a total of  0.00  from holding Formcap Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.46%
Values	Daily Returns

Solar Enertech Corp  vs.  Formcap Corp

Solar Enertech Corp

Risk-Adjusted Performance

Weakest

Over the last 90 days Solar Enertech Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Solar Enertech is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Formcap Corp

Risk-Adjusted Performance

Weakest

Over the last 90 days Formcap Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, Formcap Corp is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Solar Enertech and Formcap Corp

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

The idea behind Solar Enertech Corp and Formcap Corp 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.