Correlation Between Solar Alliance and Emeren
Can any of the company-specific risk be diversified away by investing in both Solar Alliance 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 Solar Alliance and Emeren into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solar Alliance Energy and Emeren Group, you can compare the effects of market volatilities on Solar Alliance 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 Solar Alliance with a short position of Emeren. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solar Alliance and Emeren.
Diversification Opportunities for Solar Alliance and Emeren
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Solar and Emeren is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Solar Alliance Energy and Emeren Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emeren Group and Solar Alliance 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 Solar Alliance 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 Solar Alliance i.e., Solar Alliance and Emeren go up and down completely randomly.
Pair Corralation between Solar Alliance and Emeren
Assuming the 90 days horizon Solar Alliance Energy is expected to generate 3.08 times more return on investment than Emeren. However, Solar Alliance is 3.08 times more volatile than Emeren Group. It trades about -0.08 of its potential returns per unit of risk. Emeren Group is currently generating about -0.29 per unit of risk. If you would invest 2.20 in Solar Alliance Energy on November 27, 2024 and sell it today you would lose (0.39) from holding Solar Alliance Energy or give up 17.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solar Alliance Energy vs. Emeren Group
Performance |
| Timeline |
| Solar Alliance Energy |
| Emeren Group |
Solar Alliance and Emeren Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solar Alliance and Emeren
The main advantage of trading using opposite Solar Alliance and Emeren positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solar Alliance 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.| Solar Alliance vs. Aurora Solar Technologies | Solar Alliance vs. Cryptoblox Technologies | Solar Alliance vs. Sun Pacific Holding | Solar Alliance vs. Solar Integrated Roofing |
| Emeren vs. Canadian Solar | Emeren vs. Maxeon Solar Technologies | Emeren vs. SolarEdge Technologies | Emeren vs. Sunnova Energy International |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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