Correlation Between TGI Solar and Xinyi Solar

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

Diversification Opportunities for TGI Solar and Xinyi Solar

0.17

Correlation Coefficient

TGI Solar  Xinyi Solar

Average diversification

The 3 months correlation between TGI and Xinyi is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding TGI Solar Power and Xinyi Solar Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xinyi Solar Holdings 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 Xinyi Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xinyi Solar Holdings has no effect on the direction of TGI Solar i.e., TGI Solar and Xinyi Solar go up and down completely randomly.

Pair Corralation between TGI Solar and Xinyi Solar

Given the investment horizon of 90 days TGI Solar Power is expected to generate 2.94 times more return on investment than Xinyi Solar. However, TGI Solar is 2.94 times more volatile than Xinyi Solar Holdings. It trades about 0.06 of its potential returns per unit of risk. Xinyi Solar Holdings is currently generating about 0.01 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	Insignificant
Accuracy	97.37%
Values	Daily Returns

TGI Solar Power  vs.  Xinyi Solar Holdings

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.

Xinyi Solar Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with TGI Solar and Xinyi Solar

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

The idea behind TGI Solar Power and Xinyi Solar Holdings 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.