Correlation Between JinkoSolar Holding and SolarEdge Technologies

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

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

Diversification Opportunities for JinkoSolar Holding and SolarEdge Technologies

0.17

Correlation Coefficient

JinkoSolar Holding  SolarEdge Technologies

Average diversification

The 3 months correlation between JinkoSolar and SolarEdge is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding JinkoSolar Holding and SolarEdge Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SolarEdge Technologies and JinkoSolar Holding 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 JinkoSolar Holding are associated (or correlated) with SolarEdge Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SolarEdge Technologies has no effect on the direction of JinkoSolar Holding i.e., JinkoSolar Holding and SolarEdge Technologies go up and down completely randomly.

Pair Corralation between JinkoSolar Holding and SolarEdge Technologies

Considering the 90-day investment horizon JinkoSolar Holding is expected to generate 0.82 times more return on investment than SolarEdge Technologies. However, JinkoSolar Holding is 1.22 times less risky than SolarEdge Technologies. It trades about -0.01 of its potential returns per unit of risk. SolarEdge Technologies is currently generating about -0.08 per unit of risk. If you would invest  4,401  in JinkoSolar Holding on November 28, 2024 and sell it today you would lose (2,005) from holding JinkoSolar Holding or give up 45.56% of portfolio value over 90 days.

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

JinkoSolar Holding  vs.  SolarEdge Technologies

JinkoSolar Holding

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in JinkoSolar Holding are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable forward-looking signals, JinkoSolar Holding is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

SolarEdge Technologies

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SolarEdge Technologies are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, SolarEdge Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JinkoSolar Holding and SolarEdge Technologies

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

The idea behind JinkoSolar Holding and SolarEdge Technologies 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.