Correlation Between GCL Poly and Shoals Technologies

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

Diversification Opportunities for GCL Poly and Shoals Technologies

0.06

Correlation Coefficient

GCL Poly  Shoals Technologies

Significant diversification

The 3 months correlation between GCL and Shoals is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding GCL Poly Energy Holdings and Shoals Technologies Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shoals Technologies 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 Shoals Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shoals Technologies has no effect on the direction of GCL Poly i.e., GCL Poly and Shoals Technologies go up and down completely randomly.

Pair Corralation between GCL Poly and Shoals Technologies

Assuming the 90 days horizon GCL Poly Energy Holdings is expected to generate 2.42 times more return on investment than Shoals Technologies. However, GCL Poly is 2.42 times more volatile than Shoals Technologies Group. It trades about 0.03 of its potential returns per unit of risk. Shoals Technologies Group is currently generating about -0.14 per unit of risk. If you would invest  16.00  in GCL Poly Energy Holdings on December 27, 2024 and sell it today you would lose (3.00) from holding GCL Poly Energy Holdings or give up 18.75% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	93.33%
Values	Daily Returns

GCL Poly Energy Holdings  vs.  Shoals Technologies Group

GCL Poly Energy

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GCL Poly Energy Holdings are ranked lower than 2 (%) 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.

Shoals Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shoals Technologies Group 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 essential indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with GCL Poly and Shoals Technologies

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

The idea behind GCL Poly Energy Holdings and Shoals Technologies Group 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..