Correlation Between Eternal Energy and Thachang Green

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

By analyzing existing cross correlation between Eternal Energy Public and Thachang Green Energy, you can compare the effects of market volatilities on Eternal Energy and Thachang Green 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 Eternal Energy with a short position of Thachang Green. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eternal Energy and Thachang Green.

Diversification Opportunities for Eternal Energy and Thachang Green

-0.44

Correlation Coefficient

Eternal Energy  Thachang Green

Very good diversification

The 3 months correlation between Eternal and Thachang is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Eternal Energy Public and Thachang Green Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thachang Green Energy and Eternal Energy 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 Eternal Energy Public are associated (or correlated) with Thachang Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thachang Green Energy has no effect on the direction of Eternal Energy i.e., Eternal Energy and Thachang Green go up and down completely randomly.

Pair Corralation between Eternal Energy and Thachang Green

Assuming the 90 days horizon Eternal Energy Public is expected to generate 4.89 times more return on investment than Thachang Green. However, Eternal Energy is 4.89 times more volatile than Thachang Green Energy. It trades about 0.26 of its potential returns per unit of risk. Thachang Green Energy is currently generating about -0.09 per unit of risk. If you would invest  17.00  in Eternal Energy Public on September 13, 2024 and sell it today you would earn a total of  45.00  from holding Eternal Energy Public or generate 264.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Eternal Energy Public  vs.  Thachang Green Energy

Eternal Energy Public

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Eternal Energy Public are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental drivers, Eternal Energy disclosed solid returns over the last few months and may actually be approaching a breakup point.

Thachang Green Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thachang Green Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's technical and fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Eternal Energy and Thachang Green

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

The idea behind Eternal Energy Public and Thachang Green Energy 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 Stocks Directory module to find actively traded stocks across global markets.