Correlation Between Eguana Technologies and Tecogen

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

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

Diversification Opportunities for Eguana Technologies and Tecogen

0.33

Correlation Coefficient

Eguana Technologies  Tecogen

Weak diversification

The 3 months correlation between Eguana and Tecogen is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Eguana Technologies and Tecogen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tecogen and Eguana Technologies 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 Eguana Technologies are associated (or correlated) with Tecogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tecogen has no effect on the direction of Eguana Technologies i.e., Eguana Technologies and Tecogen go up and down completely randomly.

Pair Corralation between Eguana Technologies and Tecogen

If you would invest  0.41  in Eguana Technologies on September 2, 2024 and sell it today you would earn a total of  0.47  from holding Eguana Technologies or generate 114.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	1.56%
Values	Daily Returns

Eguana Technologies  vs.  Tecogen

Eguana Technologies

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eguana Technologies are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Eguana Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

Tecogen

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tecogen has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Tecogen is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Eguana Technologies and Tecogen

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

The idea behind Eguana Technologies and Tecogen 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.