Correlation Between Secure Energy and TGI Solar

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

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

Diversification Opportunities for Secure Energy and TGI Solar

-0.85

Correlation Coefficient

Secure Energy  TGI Solar

Pay attention - limited upside

The 3 months correlation between Secure and TGI is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Secure Energy Services and TGI Solar Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TGI Solar Power and Secure Energy 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 Secure Energy Services are associated (or correlated) with TGI Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TGI Solar Power has no effect on the direction of Secure Energy i.e., Secure Energy and TGI Solar go up and down completely randomly.

Pair Corralation between Secure Energy and TGI Solar

Assuming the 90 days horizon Secure Energy Services is expected to under-perform the TGI Solar. But the pink sheet apears to be less risky and, when comparing its historical volatility, Secure Energy Services is 10.99 times less risky than TGI Solar. The pink sheet trades about -0.03 of its potential returns per unit of risk. The TGI Solar Power is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  0.08  in TGI Solar Power on September 16, 2024 and sell it today you would lose (0.01) from holding TGI Solar Power or give up 12.5% of portfolio value over 90 days.

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

Secure Energy Services  vs.  TGI Solar Power

Secure Energy Services

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Secure Energy Services are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Secure Energy reported solid returns over the last few months and may actually be approaching a breakup point.

TGI Solar Power

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TGI Solar Power has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Secure Energy and TGI Solar

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

The idea behind Secure Energy Services and TGI Solar Power 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.