Correlation Between Emeren and Solarmax Technology

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

By analyzing existing cross correlation between Emeren Group and Solarmax Technology Common, you can compare the effects of market volatilities on Emeren and Solarmax Technology 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 Emeren with a short position of Solarmax Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emeren and Solarmax Technology.

Diversification Opportunities for Emeren and Solarmax Technology

0.52

Correlation Coefficient

Emeren  Solarmax Technology

Very weak diversification

The 3 months correlation between Emeren and Solarmax is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Emeren Group and Solarmax Technology Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solarmax Technology and Emeren 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 Emeren Group are associated (or correlated) with Solarmax Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solarmax Technology has no effect on the direction of Emeren i.e., Emeren and Solarmax Technology go up and down completely randomly.

Pair Corralation between Emeren and Solarmax Technology

Considering the 90-day investment horizon Emeren is expected to generate 13.18 times less return on investment than Solarmax Technology. But when comparing it to its historical volatility, Emeren Group is 1.19 times less risky than Solarmax Technology. It trades about 0.0 of its potential returns per unit of risk. Solarmax Technology Common is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  127.00  in Solarmax Technology Common on December 20, 2024 and sell it today you would lose (13.00) from holding Solarmax Technology Common or give up 10.24% of portfolio value over 90 days.

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

Emeren Group  vs.  Solarmax Technology Common

Emeren Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Emeren Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Emeren is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Solarmax Technology

Risk-Adjusted Performance

Weak

Over the last 90 days Solarmax Technology Common has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Solarmax Technology is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Emeren and Solarmax Technology

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

The idea behind Emeren Group and Solarmax Technology Common 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.