Correlation Between TGI Solar and SunHydrogen

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

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

Diversification Opportunities for TGI Solar and SunHydrogen

0.28

Correlation Coefficient

TGI Solar  SunHydrogen

Modest diversification

The 3 months correlation between TGI and SunHydrogen is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding TGI Solar Power and SunHydrogen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SunHydrogen and TGI Solar 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 TGI Solar Power are associated (or correlated) with SunHydrogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SunHydrogen has no effect on the direction of TGI Solar i.e., TGI Solar and SunHydrogen go up and down completely randomly.

Pair Corralation between TGI Solar and SunHydrogen

Given the investment horizon of 90 days TGI Solar Power is expected to generate 2.3 times more return on investment than SunHydrogen. However, TGI Solar is 2.3 times more volatile than SunHydrogen. It trades about 0.06 of its potential returns per unit of risk. SunHydrogen is currently generating about 0.03 per unit of risk. If you would invest  0.42  in TGI Solar Power on October 25, 2024 and sell it today you would lose (0.22) from holding TGI Solar Power or give up 52.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	97.77%
Values	Daily Returns

TGI Solar Power  vs.  SunHydrogen

TGI Solar Power

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TGI Solar Power are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, TGI Solar reported solid returns over the last few months and may actually be approaching a breakup point.

SunHydrogen

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SunHydrogen are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, SunHydrogen reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TGI Solar and SunHydrogen

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

The idea behind TGI Solar Power and SunHydrogen 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.