Correlation Between Emeren and Maxeon Solar

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

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

Diversification Opportunities for Emeren and Maxeon Solar

-0.56

Correlation Coefficient

Emeren  Maxeon Solar

Excellent diversification

The 3 months correlation between Emeren and Maxeon is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Emeren Group and Maxeon Solar Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maxeon Solar Technologies 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 Maxeon Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maxeon Solar Technologies has no effect on the direction of Emeren i.e., Emeren and Maxeon Solar go up and down completely randomly.

Pair Corralation between Emeren and Maxeon Solar

Considering the 90-day investment horizon Emeren Group is expected to under-perform the Maxeon Solar. But the stock apears to be less risky and, when comparing its historical volatility, Emeren Group is 3.01 times less risky than Maxeon Solar. The stock trades about -0.2 of its potential returns per unit of risk. The Maxeon Solar Technologies is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  647.00  in Maxeon Solar Technologies on August 28, 2024 and sell it today you would earn a total of  151.00  from holding Maxeon Solar Technologies or generate 23.34% return on investment over 90 days.

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

Emeren Group  vs.  Maxeon Solar Technologies

Emeren Group

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Emeren Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Emeren may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Maxeon Solar Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Maxeon Solar Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Emeren and Maxeon Solar

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

The idea behind Emeren Group and Maxeon Solar 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.