Correlation Between Tecogen and Eguana Technologies

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

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

Diversification Opportunities for Tecogen and Eguana Technologies

0.33

Correlation Coefficient

Tecogen  Eguana Technologies

Weak diversification

The 3 months correlation between Tecogen and Eguana is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Tecogen and Eguana Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eguana Technologies and Tecogen 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 Tecogen are associated (or correlated) with Eguana Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eguana Technologies has no effect on the direction of Tecogen i.e., Tecogen and Eguana Technologies go up and down completely randomly.

Pair Corralation between Tecogen and Eguana Technologies

If you would invest  2.00  in Eguana Technologies on September 2, 2024 and sell it today you would lose (1.12) from holding Eguana Technologies or give up 56.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	0.4%
Values	Daily Returns

Tecogen  vs.  Eguana Technologies

Tecogen

Risk-Adjusted Performance

0 of 100

Very Weak

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

Eguana Technologies

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eguana Technologies are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Eguana Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tecogen and Eguana Technologies

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

The idea behind Tecogen and Eguana Technologies 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.