Correlation Between GCL Poly and Enphase Energy

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

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

Diversification Opportunities for GCL Poly and Enphase Energy

0.43

Correlation Coefficient

GCL Poly  Enphase Energy

Very weak diversification

The 3 months correlation between GCL and Enphase is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding GCL Poly Energy Holdings and Enphase Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enphase Energy and GCL Poly 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 GCL Poly Energy Holdings are associated (or correlated) with Enphase Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enphase Energy has no effect on the direction of GCL Poly i.e., GCL Poly and Enphase Energy go up and down completely randomly.

Pair Corralation between GCL Poly and Enphase Energy

Assuming the 90 days horizon GCL Poly Energy Holdings is expected to under-perform the Enphase Energy. In addition to that, GCL Poly is 3.68 times more volatile than Enphase Energy. It trades about -0.02 of its total potential returns per unit of risk. Enphase Energy is currently generating about -0.06 per unit of volatility. If you would invest  7,301  in Enphase Energy on December 25, 2024 and sell it today you would lose (1,024) from holding Enphase Energy or give up 14.03% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	91.67%
Values	Daily Returns

GCL Poly Energy Holdings  vs.  Enphase Energy

GCL Poly Energy

Risk-Adjusted Performance

Weak

Over the last 90 days GCL Poly Energy Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Enphase Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Enphase Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with GCL Poly and Enphase Energy

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

The idea behind GCL Poly Energy Holdings and Enphase 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.

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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.