Correlation Between Mass Megawat and Renew Energy

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

By analyzing existing cross correlation between Mass Megawat Wind and Renew Energy Global, you can compare the effects of market volatilities on Mass Megawat and Renew 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 Mass Megawat with a short position of Renew Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mass Megawat and Renew Energy.

Diversification Opportunities for Mass Megawat and Renew Energy

0.27

Correlation Coefficient

Mass Megawat  Renew Energy

Modest diversification

The 3 months correlation between Mass and Renew is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Mass Megawat Wind and Renew Energy Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Renew Energy Global and Mass Megawat 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 Mass Megawat Wind are associated (or correlated) with Renew Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Renew Energy Global has no effect on the direction of Mass Megawat i.e., Mass Megawat and Renew Energy go up and down completely randomly.

Pair Corralation between Mass Megawat and Renew Energy

Given the investment horizon of 90 days Mass Megawat Wind is expected to generate 13.27 times more return on investment than Renew Energy. However, Mass Megawat is 13.27 times more volatile than Renew Energy Global. It trades about 0.13 of its potential returns per unit of risk. Renew Energy Global is currently generating about 0.11 per unit of risk. If you would invest  55.00  in Mass Megawat Wind on September 13, 2024 and sell it today you would lose (21.00) from holding Mass Megawat Wind or give up 38.18% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Mass Megawat Wind  vs.  Renew Energy Global

Mass Megawat Wind

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mass Megawat Wind are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak primary indicators, Mass Megawat showed solid returns over the last few months and may actually be approaching a breakup point.

Renew Energy Global

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Renew Energy Global are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Renew Energy showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mass Megawat and Renew Energy

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

The idea behind Mass Megawat Wind and Renew Energy Global 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.

Check out your portfolio center.

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 Stocks Directory module to find actively traded stocks across global markets.