Correlation Between Solar Alliance and GDI Integrated

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

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

Diversification Opportunities for Solar Alliance and GDI Integrated

-0.51

Correlation Coefficient

Solar Alliance  GDI Integrated

Excellent diversification

The 3 months correlation between Solar and GDI is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Solar Alliance Energy and GDI Integrated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GDI Integrated and Solar Alliance 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 Solar Alliance Energy are associated (or correlated) with GDI Integrated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GDI Integrated has no effect on the direction of Solar Alliance i.e., Solar Alliance and GDI Integrated go up and down completely randomly.

Pair Corralation between Solar Alliance and GDI Integrated

Assuming the 90 days trading horizon Solar Alliance Energy is not expected to generate positive returns. Moreover, Solar Alliance is 7.88 times more volatile than GDI Integrated. It trades away all of its potential returns to assume current level of volatility. GDI Integrated is currently generating about 0.13 per unit of risk. If you would invest  3,696  in GDI Integrated on October 7, 2024 and sell it today you would earn a total of  304.00  from holding GDI Integrated or generate 8.23% return on investment over 90 days.

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

Solar Alliance Energy  vs.  GDI Integrated

Solar Alliance Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Solar Alliance Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable essential indicators, Solar Alliance is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

GDI Integrated

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GDI Integrated are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward indicators, GDI Integrated may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Solar Alliance and GDI Integrated

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

The idea behind Solar Alliance Energy and GDI Integrated 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.