Correlation Between Meyer Burger and TGI Solar

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

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

Diversification Opportunities for Meyer Burger and TGI Solar

0.54

Correlation Coefficient

Meyer Burger  TGI Solar

Very weak diversification

The 3 months correlation between Meyer and TGI is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Meyer Burger Technology 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 Meyer Burger 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 Meyer Burger Technology 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 Meyer Burger i.e., Meyer Burger and TGI Solar go up and down completely randomly.

Pair Corralation between Meyer Burger and TGI Solar

Assuming the 90 days horizon Meyer Burger Technology is expected to generate 3.55 times more return on investment than TGI Solar. However, Meyer Burger is 3.55 times more volatile than TGI Solar Power. It trades about 0.25 of its potential returns per unit of risk. TGI Solar Power is currently generating about 0.04 per unit of risk. If you would invest  121.00  in Meyer Burger Technology on September 12, 2024 and sell it today you would earn a total of  193.00  from holding Meyer Burger Technology or generate 159.5% return on investment over 90 days.

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

Meyer Burger Technology  vs.  TGI Solar Power

Meyer Burger Technology

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Meyer Burger Technology are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Meyer Burger reported solid returns over the last few months and may actually be approaching a breakup point.

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 nearly stable basic indicators, TGI Solar is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Meyer Burger and TGI Solar

The main advantage of trading using opposite Meyer Burger and TGI Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meyer Burger 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 Meyer Burger Technology 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.