Correlation Between TGI Solar and Three Sixty

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

Diversification Opportunities for TGI Solar and Three Sixty

0.08

Correlation Coefficient

TGI Solar  Three Sixty

Significant diversification

The 3 months correlation between TGI and Three is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding TGI Solar Power and Three Sixty Solar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Three Sixty Solar 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 Three Sixty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Three Sixty Solar has no effect on the direction of TGI Solar i.e., TGI Solar and Three Sixty go up and down completely randomly.

Pair Corralation between TGI Solar and Three Sixty

Given the investment horizon of 90 days TGI Solar is expected to generate 1.2 times less return on investment than Three Sixty. But when comparing it to its historical volatility, TGI Solar Power is 2.96 times less risky than Three Sixty. It trades about 0.06 of its potential returns per unit of risk. Three Sixty Solar is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  76.00  in Three Sixty Solar on October 25, 2024 and sell it today you would lose (75.99) from holding Three Sixty Solar or give up 99.99% of portfolio value over 90 days.

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

TGI Solar Power  vs.  Three Sixty Solar

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.

Three Sixty Solar

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Three Sixty Solar are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak essential indicators, Three Sixty reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TGI Solar and Three Sixty

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

The idea behind TGI Solar Power and Three Sixty Solar 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.