Correlation Between TGI Solar and Enerkon Solar

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

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

Diversification Opportunities for TGI Solar and Enerkon Solar

0.76

Correlation Coefficient

TGI Solar  Enerkon Solar

Poor diversification

The 3 months correlation between TGI and Enerkon is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding TGI Solar Power and Enerkon Solar International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enerkon Solar Intern and TGI Solar 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 TGI Solar Power are associated (or correlated) with Enerkon Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enerkon Solar Intern has no effect on the direction of TGI Solar i.e., TGI Solar and Enerkon Solar go up and down completely randomly.

Pair Corralation between TGI Solar and Enerkon Solar

Given the investment horizon of 90 days TGI Solar is expected to generate 5.21 times less return on investment than Enerkon Solar. But when comparing it to its historical volatility, TGI Solar Power is 2.76 times less risky than Enerkon Solar. It trades about 0.05 of its potential returns per unit of risk. Enerkon Solar International is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1.30  in Enerkon Solar International on September 4, 2024 and sell it today you would lose (1.28) from holding Enerkon Solar International or give up 98.46% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.6%
Values	Daily Returns

TGI Solar Power  vs.  Enerkon Solar International

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 fragile 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.

Enerkon Solar Intern

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Enerkon Solar International are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Enerkon Solar exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TGI Solar and Enerkon Solar

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

The idea behind TGI Solar Power and Enerkon Solar International 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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.