Correlation Between SolarEdge Technologies and GCL Poly

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

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

Diversification Opportunities for SolarEdge Technologies and GCL Poly

-0.18

Correlation Coefficient

SolarEdge Technologies  GCL Poly

Good diversification

The 3 months correlation between SolarEdge and GCL is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding SolarEdge Technologies and GCL Poly Energy Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GCL Poly Energy and SolarEdge Technologies 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 SolarEdge Technologies are associated (or correlated) with GCL Poly. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GCL Poly Energy has no effect on the direction of SolarEdge Technologies i.e., SolarEdge Technologies and GCL Poly go up and down completely randomly.

Pair Corralation between SolarEdge Technologies and GCL Poly

Given the investment horizon of 90 days SolarEdge Technologies is expected to generate 0.36 times more return on investment than GCL Poly. However, SolarEdge Technologies is 2.75 times less risky than GCL Poly. It trades about 0.08 of its potential returns per unit of risk. GCL Poly Energy Holdings is currently generating about -0.04 per unit of risk. If you would invest  1,311  in SolarEdge Technologies on October 20, 2024 and sell it today you would earn a total of  80.00  from holding SolarEdge Technologies or generate 6.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

SolarEdge Technologies  vs.  GCL Poly Energy Holdings

SolarEdge Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SolarEdge Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, SolarEdge Technologies is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

GCL Poly Energy

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GCL Poly Energy Holdings are ranked lower than 3 (%) 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.

Pair Trading with SolarEdge Technologies and GCL Poly

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

The idea behind SolarEdge Technologies and GCL Poly Energy Holdings 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.