Correlation Between JinkoSolar Holding and SolarEdge Technologies

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

By analyzing existing cross correlation between JinkoSolar Holding Co and SolarEdge Technologies, you can compare the effects of market volatilities on JinkoSolar Holding and SolarEdge Technologies 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 JinkoSolar Holding with a short position of SolarEdge Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of JinkoSolar Holding and SolarEdge Technologies.

Diversification Opportunities for JinkoSolar Holding and SolarEdge Technologies

-0.1

Correlation Coefficient

JinkoSolar Holding  SolarEdge Technologies

Good diversification

The 3 months correlation between JinkoSolar and SolarEdge is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding JinkoSolar Holding Co and SolarEdge Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SolarEdge Technologies and JinkoSolar Holding 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 JinkoSolar Holding Co are associated (or correlated) with SolarEdge Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SolarEdge Technologies has no effect on the direction of JinkoSolar Holding i.e., JinkoSolar Holding and SolarEdge Technologies go up and down completely randomly.

Pair Corralation between JinkoSolar Holding and SolarEdge Technologies

Assuming the 90 days trading horizon JinkoSolar Holding is expected to generate 2.87 times less return on investment than SolarEdge Technologies. But when comparing it to its historical volatility, JinkoSolar Holding Co is 1.68 times less risky than SolarEdge Technologies. It trades about 0.13 of its potential returns per unit of risk. SolarEdge Technologies is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  1,037  in SolarEdge Technologies on September 22, 2024 and sell it today you would earn a total of  423.00  from holding SolarEdge Technologies or generate 40.79% return on investment over 90 days.

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

JinkoSolar Holding Co  vs.  SolarEdge Technologies

JinkoSolar Holding

Risk-Adjusted Performance

7 of 100

OK

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

SolarEdge Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SolarEdge Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with JinkoSolar Holding and SolarEdge Technologies

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

The idea behind JinkoSolar Holding Co and SolarEdge Technologies 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 Stocks Directory module to find actively traded stocks across global markets.