Correlation Between Solana and Pace Metals

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

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

Diversification Opportunities for Solana and Pace Metals

0.0

Correlation Coefficient

Solana  Pace Metals

Pay attention - limited upside

The 3 months correlation between Solana and Pace is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Solana and Pace Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pace Metals and Solana 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 Solana are associated (or correlated) with Pace Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pace Metals has no effect on the direction of Solana i.e., Solana and Pace Metals go up and down completely randomly.

Pair Corralation between Solana and Pace Metals

Assuming the 90 days trading horizon Solana is expected to generate 1.65 times less return on investment than Pace Metals. But when comparing it to its historical volatility, Solana is 3.43 times less risky than Pace Metals. It trades about 0.1 of its potential returns per unit of risk. Pace Metals is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  195.00  in Pace Metals on April 20, 2025 and sell it today you would lose (179.00) from holding Pace Metals or give up 91.79% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	96.49%
Values	Daily Returns

Solana  vs.  Pace Metals

Solana

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Solana are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady essential indicators, Solana exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pace Metals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pace Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, Pace Metals is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Solana and Pace Metals

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

The idea behind Solana and Pace Metals 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.