Correlation Between Emeren and Solar Alliance
Can any of the company-specific risk be diversified away by investing in both Emeren and Solar Alliance 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 Emeren and Solar Alliance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emeren Group and Solar Alliance Energy, you can compare the effects of market volatilities on Emeren and Solar Alliance 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 Emeren with a short position of Solar Alliance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emeren and Solar Alliance.
Diversification Opportunities for Emeren and Solar Alliance
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Emeren and Solar is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Emeren Group and Solar Alliance Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solar Alliance Energy and Emeren 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 Emeren Group are associated (or correlated) with Solar Alliance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solar Alliance Energy has no effect on the direction of Emeren i.e., Emeren and Solar Alliance go up and down completely randomly.
Pair Corralation between Emeren and Solar Alliance
Considering the 90-day investment horizon Emeren Group is expected to generate 0.86 times more return on investment than Solar Alliance. However, Emeren Group is 1.17 times less risky than Solar Alliance. It trades about -0.25 of its potential returns per unit of risk. Solar Alliance Energy is currently generating about -0.26 per unit of risk. If you would invest 246.00 in Emeren Group on August 29, 2024 and sell it today you would lose (64.00) from holding Emeren Group or give up 26.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Emeren Group vs. Solar Alliance Energy
Performance |
| Timeline |
| Emeren Group |
| Solar Alliance Energy |
Emeren and Solar Alliance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emeren and Solar Alliance
The main advantage of trading using opposite Emeren and Solar Alliance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emeren position performs unexpectedly, Solar Alliance 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 Solar Alliance will offset losses from the drop in Solar Alliance's long position.| Emeren vs. Canadian Solar | Emeren vs. Maxeon Solar Technologies | Emeren vs. SolarEdge Technologies | Emeren vs. Sunnova Energy International |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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