Correlation Between Emeren and Tigo Energy

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

By analyzing existing cross correlation between Emeren Group and Tigo Energy, you can compare the effects of market volatilities on Emeren and Tigo Energy 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 Tigo Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emeren and Tigo Energy.

Diversification Opportunities for Emeren and Tigo Energy

0.29

Correlation Coefficient

Emeren  Tigo Energy

Modest diversification

The 3 months correlation between Emeren and Tigo is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Emeren Group and Tigo Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tigo Energy 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 Tigo Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tigo Energy has no effect on the direction of Emeren i.e., Emeren and Tigo Energy go up and down completely randomly.

Pair Corralation between Emeren and Tigo Energy

Considering the 90-day investment horizon Emeren Group is expected to under-perform the Tigo Energy. In addition to that, Emeren is 1.27 times more volatile than Tigo Energy. It trades about -0.03 of its total potential returns per unit of risk. Tigo Energy is currently generating about -0.01 per unit of volatility. If you would invest  103.00  in Tigo Energy on December 27, 2024 and sell it today you would lose (10.00) from holding Tigo Energy or give up 9.71% of portfolio value over 90 days.

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

Emeren Group  vs.  Tigo Energy

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 latest weak performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Tigo Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tigo Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Tigo Energy is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Emeren and Tigo Energy

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

The idea behind Emeren Group and Tigo Energy 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.