Correlation Between Tainergy Tech and Gigasolar Materials

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

By analyzing existing cross correlation between Tainergy Tech Co and Gigasolar Materials, you can compare the effects of market volatilities on Tainergy Tech and Gigasolar Materials 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 Tainergy Tech with a short position of Gigasolar Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tainergy Tech and Gigasolar Materials.

Diversification Opportunities for Tainergy Tech and Gigasolar Materials

0.77

Correlation Coefficient

Tainergy Tech  Gigasolar Materials

Poor diversification

The 3 months correlation between Tainergy and Gigasolar is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Tainergy Tech Co and Gigasolar Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gigasolar Materials and Tainergy Tech 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 Tainergy Tech Co are associated (or correlated) with Gigasolar Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gigasolar Materials has no effect on the direction of Tainergy Tech i.e., Tainergy Tech and Gigasolar Materials go up and down completely randomly.

Pair Corralation between Tainergy Tech and Gigasolar Materials

Assuming the 90 days trading horizon Tainergy Tech Co is expected to generate 1.39 times more return on investment than Gigasolar Materials. However, Tainergy Tech is 1.39 times more volatile than Gigasolar Materials. It trades about -0.01 of its potential returns per unit of risk. Gigasolar Materials is currently generating about -0.08 per unit of risk. If you would invest  1,435  in Tainergy Tech Co on December 4, 2024 and sell it today you would lose (60.00) from holding Tainergy Tech Co or give up 4.18% of portfolio value over 90 days.

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

Tainergy Tech Co  vs.  Gigasolar Materials

Tainergy Tech

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tainergy Tech Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Tainergy Tech is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Gigasolar Materials

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gigasolar Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Tainergy Tech and Gigasolar Materials

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

The idea behind Tainergy Tech Co and Gigasolar Materials 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.