Correlation Between Sunrun and JinkoSolar Holding

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

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

Diversification Opportunities for Sunrun and JinkoSolar Holding

0.48

Correlation Coefficient

Sunrun  JinkoSolar Holding

Very weak diversification

The 3 months correlation between Sunrun and JinkoSolar is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Sunrun Inc and JinkoSolar Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JinkoSolar Holding and Sunrun 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 Sunrun Inc are associated (or correlated) with JinkoSolar Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JinkoSolar Holding has no effect on the direction of Sunrun i.e., Sunrun and JinkoSolar Holding go up and down completely randomly.

Pair Corralation between Sunrun and JinkoSolar Holding

Considering the 90-day investment horizon Sunrun Inc is expected to under-perform the JinkoSolar Holding. In addition to that, Sunrun is 1.07 times more volatile than JinkoSolar Holding. It trades about -0.01 of its total potential returns per unit of risk. JinkoSolar Holding is currently generating about 0.06 per unit of volatility. If you would invest  2,082  in JinkoSolar Holding on November 19, 2024 and sell it today you would earn a total of  213.00  from holding JinkoSolar Holding or generate 10.23% return on investment over 90 days.

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

Sunrun Inc  vs.  JinkoSolar Holding

Sunrun Inc

Risk-Adjusted Performance

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 very healthy basic indicators, Sunrun is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

JinkoSolar Holding

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in JinkoSolar Holding are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak forward-looking signals, JinkoSolar Holding unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sunrun and JinkoSolar Holding

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

The idea behind Sunrun Inc and JinkoSolar Holding 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.