Correlation Between Tigo Energy and Emeren

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

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

Diversification Opportunities for Tigo Energy and Emeren

0.29

Correlation Coefficient

Tigo Energy  Emeren

Modest diversification

The 3 months correlation between Tigo and Emeren is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Tigo Energy and Emeren Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emeren Group and Tigo Energy 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 Tigo Energy are associated (or correlated) with Emeren. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emeren Group has no effect on the direction of Tigo Energy i.e., Tigo Energy and Emeren go up and down completely randomly.

Pair Corralation between Tigo Energy and Emeren

Given the investment horizon of 90 days Tigo Energy is expected to generate 0.79 times more return on investment than Emeren. However, Tigo Energy is 1.27 times less risky than Emeren. It trades about -0.01 of its potential returns per unit of risk. Emeren Group is currently generating about -0.03 per unit of risk. If you would invest  103.00  in Tigo Energy on December 27, 2024 and sell it today you would lose (10.00) from holding Tigo Energy or give up 9.71% of portfolio value over 90 days.

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

Tigo Energy  vs.  Emeren Group

Tigo Energy

Risk-Adjusted Performance

Very Weak

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

Emeren Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Emeren Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Tigo Energy and Emeren

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

The idea behind Tigo Energy and Emeren Group 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.