Correlation Between Scatec Solar and MPC Energy

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

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

Diversification Opportunities for Scatec Solar and MPC Energy

0.91

Correlation Coefficient

Scatec Solar  MPC Energy

Almost no diversification

The 3 months correlation between Scatec and MPC is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Scatec Solar OL and MPC Energy Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MPC Energy Solutions and Scatec Solar 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 Scatec Solar OL are associated (or correlated) with MPC Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MPC Energy Solutions has no effect on the direction of Scatec Solar i.e., Scatec Solar and MPC Energy go up and down completely randomly.

Pair Corralation between Scatec Solar and MPC Energy

Assuming the 90 days trading horizon Scatec Solar OL is expected to generate 0.76 times more return on investment than MPC Energy. However, Scatec Solar OL is 1.32 times less risky than MPC Energy. It trades about 0.35 of its potential returns per unit of risk. MPC Energy Solutions is currently generating about 0.18 per unit of risk. If you would invest  7,855  in Scatec Solar OL on April 24, 2025 and sell it today you would earn a total of  2,435  from holding Scatec Solar OL or generate 31.0% return on investment over 90 days.

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

Scatec Solar OL  vs.  MPC Energy Solutions

Scatec Solar OL

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Scatec Solar OL are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Scatec Solar displayed solid returns over the last few months and may actually be approaching a breakup point.

MPC Energy Solutions

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MPC Energy Solutions are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, MPC Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Scatec Solar and MPC Energy

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

The idea behind Scatec Solar OL and MPC Energy Solutions 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.