Correlation Between TGI Solar and Meyer Burger

Can any of the company-specific risk be diversified away by investing in both TGI Solar and Meyer Burger 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 Meyer Burger 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 Meyer Burger Technology, you can compare the effects of market volatilities on TGI Solar and Meyer Burger 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 Meyer Burger. Check out your portfolio center. Please also check ongoing floating volatility patterns of TGI Solar and Meyer Burger.

Diversification Opportunities for TGI Solar and Meyer Burger

0.11

Correlation Coefficient

TGI Solar  Meyer Burger

Average diversification

The 3 months correlation between TGI and Meyer is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding TGI Solar Power and Meyer Burger Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meyer Burger Technology 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 Meyer Burger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meyer Burger Technology has no effect on the direction of TGI Solar i.e., TGI Solar and Meyer Burger go up and down completely randomly.

Pair Corralation between TGI Solar and Meyer Burger

Given the investment horizon of 90 days TGI Solar Power is expected to generate 1.28 times more return on investment than Meyer Burger. However, TGI Solar is 1.28 times more volatile than Meyer Burger Technology. It trades about 0.1 of its potential returns per unit of risk. Meyer Burger Technology is currently generating about 0.01 per unit of risk. If you would invest  0.08  in TGI Solar Power on December 26, 2024 and sell it today you would earn a total of  0.03  from holding TGI Solar Power or generate 37.5% return on investment over 90 days.

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

TGI Solar Power  vs.  Meyer Burger Technology

TGI Solar Power

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TGI Solar Power are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, TGI Solar reported solid returns over the last few months and may actually be approaching a breakup point.

Meyer Burger Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Meyer Burger Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Meyer Burger is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with TGI Solar and Meyer Burger

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

The idea behind TGI Solar Power and Meyer Burger Technology 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.

Check out your portfolio center.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.