Hi Analyst Forum

When solving for one unknown is there then a general rule for how to isolate it?

*For example:*

*Two stocks A and B:*

*- Correlation of 0.50*

*- Covariance of 0.0043*

*- Standard deviation of stock B of 26%*

*Find the standard deviation of returns for Stock A.*

In that case I write

Corr(A,B) = Cov(A,B) / sigma_A * sigma_B => 0.50 = 0.0043 / sigma_A * 0.26

<=> *Isolate for sigma A by multiplying 0.26 on both sides and dividing by 0.0043*

sigma_A = (0.50*0.26) / 0.0043 = 30.23 (and now I have to divide 1/30.23 to get the right result).

If I go the correct way and

<=> *Isolate for sigma A by multiplying sigma_A on both sides and dividing by 0.50 I get the correct result*

sigma_A = 0.0043 / 0.50 * 0.26 = 0.0331.

Is there something I’m missing or a general rule of how to solve/isolate equations?

Kind regards,

Christoffer