Correlation Between Solar Alliance and Tigo Energy
Can any of the company-specific risk be diversified away by investing in both Solar Alliance and Tigo Energy 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 Tigo Energy 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 Tigo Energy, you can compare the effects of market volatilities on Solar Alliance and Tigo Energy 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 Tigo Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solar Alliance and Tigo Energy.
Diversification Opportunities for Solar Alliance and Tigo Energy
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Solar and Tigo is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Solar Alliance Energy and Tigo Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tigo Energy 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 Tigo Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tigo Energy has no effect on the direction of Solar Alliance i.e., Solar Alliance and Tigo Energy go up and down completely randomly.
Pair Corralation between Solar Alliance and Tigo Energy
Assuming the 90 days horizon Solar Alliance Energy is expected to under-perform the Tigo Energy. In addition to that, Solar Alliance is 1.15 times more volatile than Tigo Energy. It trades about -0.14 of its total potential returns per unit of risk. Tigo Energy is currently generating about -0.15 per unit of volatility. If you would invest 111.00 in Tigo Energy on September 3, 2024 and sell it today you would lose (19.00) from holding Tigo Energy or give up 17.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solar Alliance Energy vs. Tigo Energy
Performance |
| Timeline |
| Solar Alliance Energy |
| Tigo Energy |
Solar Alliance and Tigo Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solar Alliance and Tigo Energy
The main advantage of trading using opposite Solar Alliance and Tigo Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solar Alliance position performs unexpectedly, Tigo Energy 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 Tigo Energy will offset losses from the drop in Tigo Energy'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 |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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