Correlation Between Clear Blue and TGI Solar

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

By analyzing existing cross correlation between Clear Blue Technologies and TGI Solar Power, you can compare the effects of market volatilities on Clear Blue and TGI 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 Clear Blue with a short position of TGI Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clear Blue and TGI Solar.

Diversification Opportunities for Clear Blue and TGI Solar

0.81

Correlation Coefficient

Clear Blue  TGI Solar

Very poor diversification

The 3 months correlation between Clear and TGI is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Clear Blue Technologies and TGI Solar Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TGI Solar Power and Clear Blue 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 Clear Blue Technologies are associated (or correlated) with TGI Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TGI Solar Power has no effect on the direction of Clear Blue i.e., Clear Blue and TGI Solar go up and down completely randomly.

Pair Corralation between Clear Blue and TGI Solar

Assuming the 90 days horizon Clear Blue Technologies is expected to under-perform the TGI Solar. In addition to that, Clear Blue is 1.22 times more volatile than TGI Solar Power. It trades about -0.03 of its total potential returns per unit of risk. TGI Solar Power is currently generating about -0.02 per unit of volatility. If you would invest  0.17  in TGI Solar Power on September 2, 2024 and sell it today you would lose (0.09) from holding TGI Solar Power or give up 52.94% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.46%
Values	Daily Returns

Clear Blue Technologies  vs.  TGI Solar Power

Clear Blue Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Clear Blue Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

TGI Solar Power

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TGI Solar Power has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Clear Blue and TGI Solar

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

The idea behind Clear Blue Technologies and TGI Solar Power 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.