Correlation Between Axon Enterprise and TGI Solar

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

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

Diversification Opportunities for Axon Enterprise and TGI Solar

0.0

Correlation Coefficient

Axon Enterprise  TGI Solar

Pay attention - limited upside

The 3 months correlation between Axon and TGI is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Axon Enterprise 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 Axon Enterprise 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 Axon Enterprise 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 Axon Enterprise i.e., Axon Enterprise and TGI Solar go up and down completely randomly.

Pair Corralation between Axon Enterprise and TGI Solar

Given the investment horizon of 90 days Axon Enterprise is expected to generate 1.25 times less return on investment than TGI Solar. But when comparing it to its historical volatility, Axon Enterprise is 3.68 times less risky than TGI Solar. It trades about 0.1 of its potential returns per unit of risk. TGI Solar Power is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  0.24  in TGI Solar Power on December 5, 2024 and sell it today you would lose (0.11) from holding TGI Solar Power or give up 45.83% of portfolio value over 90 days.

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

Axon Enterprise  vs.  TGI Solar Power

Axon Enterprise

Risk-Adjusted Performance

Very Weak

Over the last 90 days Axon Enterprise has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

TGI Solar Power

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TGI Solar Power are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, TGI Solar reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Axon Enterprise and TGI Solar

The main advantage of trading using opposite Axon Enterprise and TGI Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axon Enterprise 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 Axon Enterprise 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.

Check out your portfolio center.

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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.