Correlation Between Principal Solar and Enerkon Solar

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

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

Diversification Opportunities for Principal Solar and Enerkon Solar

0.47

Correlation Coefficient

Principal Solar  Enerkon Solar

Very weak diversification

The 3 months correlation between Principal and Enerkon is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Principal Solar and Enerkon Solar International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enerkon Solar Intern and Principal Solar 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 Principal Solar are associated (or correlated) with Enerkon Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enerkon Solar Intern has no effect on the direction of Principal Solar i.e., Principal Solar and Enerkon Solar go up and down completely randomly.

Pair Corralation between Principal Solar and Enerkon Solar

Given the investment horizon of 90 days Principal Solar is expected to generate 1.19 times more return on investment than Enerkon Solar. However, Principal Solar is 1.19 times more volatile than Enerkon Solar International. It trades about 0.2 of its potential returns per unit of risk. Enerkon Solar International is currently generating about 0.14 per unit of risk. If you would invest  0.01  in Principal Solar on December 27, 2024 and sell it today you would earn a total of  0.02  from holding Principal Solar or generate 200.0% return on investment over 90 days.

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

Principal Solar  vs.  Enerkon Solar International

Principal Solar

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Principal Solar are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Principal Solar showed solid returns over the last few months and may actually be approaching a breakup point.

Enerkon Solar Intern

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Enerkon Solar International are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Enerkon Solar exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Principal Solar and Enerkon Solar

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

The idea behind Principal Solar and Enerkon Solar International 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.