Correlation Between Eos Energy and Solidion Technology

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

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

Diversification Opportunities for Eos Energy and Solidion Technology

-0.17

Correlation Coefficient

Eos Energy  Solidion Technology

Good diversification

The 3 months correlation between Eos and Solidion is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Eos Energy Enterprises and Solidion Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solidion Technology and Eos Energy 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 Eos Energy Enterprises are associated (or correlated) with Solidion Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solidion Technology has no effect on the direction of Eos Energy i.e., Eos Energy and Solidion Technology go up and down completely randomly.

Pair Corralation between Eos Energy and Solidion Technology

Given the investment horizon of 90 days Eos Energy Enterprises is expected to under-perform the Solidion Technology. But the stock apears to be less risky and, when comparing its historical volatility, Eos Energy Enterprises is 1.01 times less risky than Solidion Technology. The stock trades about -0.06 of its potential returns per unit of risk. The Solidion Technology is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  230.00  in Solidion Technology on February 26, 2024 and sell it today you would earn a total of  12.00  from holding Solidion Technology or generate 5.22% return on investment over 90 days.

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

Eos Energy Enterprises  vs.  Solidion Technology

Eos Energy Enterprises

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eos Energy Enterprises has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in June 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Solidion Technology

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Solidion Technology are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Solidion Technology demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eos Energy and Solidion Technology

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

The idea behind Eos Energy Enterprises and Solidion Technology 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.