Correlation Between YPF Sociedad and First Solar

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

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

Diversification Opportunities for YPF Sociedad and First Solar

0.68

Correlation Coefficient

YPF Sociedad  First Solar

Poor diversification

The 3 months correlation between YPF and First is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding YPF Sociedad Annima and First Solar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Solar and YPF Sociedad 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 YPF Sociedad Annima are associated (or correlated) with First Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Solar has no effect on the direction of YPF Sociedad i.e., YPF Sociedad and First Solar go up and down completely randomly.

Pair Corralation between YPF Sociedad and First Solar

Assuming the 90 days trading horizon YPF Sociedad Annima is expected to generate 1.62 times more return on investment than First Solar. However, YPF Sociedad is 1.62 times more volatile than First Solar. It trades about 0.31 of its potential returns per unit of risk. First Solar is currently generating about 0.33 per unit of risk. If you would invest  31,999  in YPF Sociedad Annima on February 4, 2024 and sell it today you would earn a total of  6,133  from holding YPF Sociedad Annima or generate 19.17% return on investment over 90 days.

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

YPF Sociedad Annima  vs.  First Solar

YPF Sociedad Annima

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in YPF Sociedad Annima are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, YPF Sociedad showed solid returns over the last few months and may actually be approaching a breakup point.

First Solar

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in First Solar are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, First Solar showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with YPF Sociedad and First Solar

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

The idea behind YPF Sociedad Annima and First Solar 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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.