Correlation Between Newhydrogen and TGI Solar

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

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

Diversification Opportunities for Newhydrogen and TGI Solar

0.7

Correlation Coefficient

Newhydrogen  TGI Solar

Poor diversification

The 3 months correlation between Newhydrogen and TGI is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Newhydrogen 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 Newhydrogen 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 Newhydrogen 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 Newhydrogen i.e., Newhydrogen and TGI Solar go up and down completely randomly.

Pair Corralation between Newhydrogen and TGI Solar

Given the investment horizon of 90 days Newhydrogen is expected to generate 0.64 times more return on investment than TGI Solar. However, Newhydrogen is 1.56 times less risky than TGI Solar. It trades about 0.02 of its potential returns per unit of risk. TGI Solar Power is currently generating about -0.02 per unit of risk. If you would invest  0.42  in Newhydrogen on September 2, 2024 and sell it today you would lose (0.05) from holding Newhydrogen or give up 11.9% of portfolio value over 90 days.

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

Newhydrogen  vs.  TGI Solar Power

Newhydrogen

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Newhydrogen are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Newhydrogen may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 Newhydrogen and TGI Solar

The main advantage of trading using opposite Newhydrogen and TGI Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newhydrogen 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 Newhydrogen 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.