Correlation Between First Solar and Xinyi Solar
Can any of the company-specific risk be diversified away by investing in both First 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 First 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 First Solar and Xinyi Solar Holdings, you can compare the effects of market volatilities on First 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 First Solar with a short position of Xinyi Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Solar and Xinyi Solar.
Diversification Opportunities for First Solar and Xinyi Solar
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between First and Xinyi is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding First Solar 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 First 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 First Solar 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 First Solar i.e., First Solar and Xinyi Solar go up and down completely randomly.
Pair Corralation between First Solar and Xinyi Solar
Given the investment horizon of 90 days First Solar is expected to generate 0.89 times more return on investment than Xinyi Solar. However, First Solar is 1.12 times less risky than Xinyi Solar. It trades about -0.05 of its potential returns per unit of risk. Xinyi Solar Holdings is currently generating about -0.14 per unit of risk. If you would invest 19,241 in First Solar on August 24, 2024 and sell it today you would lose (1,046) from holding First Solar or give up 5.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
First Solar vs. Xinyi Solar Holdings
Performance |
| Timeline |
| First Solar |
| Xinyi Solar Holdings |
First Solar and Xinyi Solar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Solar and Xinyi Solar
The main advantage of trading using opposite First Solar and Xinyi Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First 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.| First Solar vs. Enphase Energy | First Solar vs. Sunrun Inc | First Solar vs. Canadian Solar | First Solar vs. SolarEdge Technologies |
| Xinyi Solar vs. SMA Solar Technology | Xinyi Solar vs. Xinyi Solar Holdings | Xinyi Solar vs. Sunrun Inc | Xinyi Solar vs. SMA Solar Technology |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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