Correlation Between GCL Poly and Sunrun

Can any of the company-specific risk be diversified away by investing in both GCL Poly and Sunrun 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 Sunrun 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 Sunrun Inc, you can compare the effects of market volatilities on GCL Poly and Sunrun 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 Sunrun. Check out your portfolio center. Please also check ongoing floating volatility patterns of GCL Poly and Sunrun.

Diversification Opportunities for GCL Poly and Sunrun

-0.7

Correlation Coefficient

GCL Poly  Sunrun

Excellent diversification

The 3 months correlation between GCL and Sunrun is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding GCL Poly Energy Holdings and Sunrun Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunrun Inc 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 Sunrun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunrun Inc has no effect on the direction of GCL Poly i.e., GCL Poly and Sunrun go up and down completely randomly.

Pair Corralation between GCL Poly and Sunrun

Assuming the 90 days horizon GCL Poly Energy Holdings is expected to generate 2.03 times more return on investment than Sunrun. However, GCL Poly is 2.03 times more volatile than Sunrun Inc. It trades about 0.01 of its potential returns per unit of risk. Sunrun Inc is currently generating about -0.06 per unit of risk. If you would invest  19.00  in GCL Poly Energy Holdings on September 15, 2024 and sell it today you would lose (1.00) from holding GCL Poly Energy Holdings or give up 5.26% of portfolio value over 90 days.

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

GCL Poly Energy Holdings  vs.  Sunrun Inc

GCL Poly Energy

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GCL Poly Energy Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, GCL Poly reported solid returns over the last few months and may actually be approaching a breakup point.

Sunrun Inc

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with GCL Poly and Sunrun

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

The idea behind GCL Poly Energy Holdings and Sunrun Inc 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.