Correlation Between TGI Solar and MPhase Technologies

Can any of the company-specific risk be diversified away by investing in both TGI Solar and MPhase Technologies 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 MPhase Technologies 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 mPhase Technologies, you can compare the effects of market volatilities on TGI Solar and MPhase Technologies 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 MPhase Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of TGI Solar and MPhase Technologies.

Diversification Opportunities for TGI Solar and MPhase Technologies

-0.34

Correlation Coefficient

TGI Solar  MPhase Technologies

Very good diversification

The 3 months correlation between TGI and MPhase is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding TGI Solar Power and mPhase Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on mPhase Technologies 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 MPhase Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of mPhase Technologies has no effect on the direction of TGI Solar i.e., TGI Solar and MPhase Technologies go up and down completely randomly.

Pair Corralation between TGI Solar and MPhase Technologies

Given the investment horizon of 90 days TGI Solar is expected to generate 10.07 times less return on investment than MPhase Technologies. But when comparing it to its historical volatility, TGI Solar Power is 3.81 times less risky than MPhase Technologies. It trades about 0.05 of its potential returns per unit of risk. mPhase Technologies is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  0.13  in mPhase Technologies on September 4, 2024 and sell it today you would lose (0.12) from holding mPhase Technologies or give up 92.31% of portfolio value over 90 days.

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

TGI Solar Power  vs.  mPhase Technologies

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.

mPhase Technologies

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in mPhase Technologies are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, MPhase Technologies disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TGI Solar and MPhase Technologies

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

The idea behind TGI Solar Power and mPhase Technologies 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.