Correlation Between Thermal Energy and Pacific Green

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

By analyzing existing cross correlation between Thermal Energy International and Pacific Green Technologies, you can compare the effects of market volatilities on Thermal Energy and Pacific Green 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 Thermal Energy with a short position of Pacific Green. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thermal Energy and Pacific Green.

Diversification Opportunities for Thermal Energy and Pacific Green

-0.22

Correlation Coefficient

Thermal Energy  Pacific Green

Very good diversification

The 3 months correlation between Thermal and Pacific is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Thermal Energy International and Pacific Green Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Green Techno and Thermal Energy 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 Thermal Energy International are associated (or correlated) with Pacific Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Green Techno has no effect on the direction of Thermal Energy i.e., Thermal Energy and Pacific Green go up and down completely randomly.

Pair Corralation between Thermal Energy and Pacific Green

Assuming the 90 days horizon Thermal Energy International is expected to under-perform the Pacific Green. In addition to that, Thermal Energy is 1.22 times more volatile than Pacific Green Technologies. It trades about -0.08 of its total potential returns per unit of risk. Pacific Green Technologies is currently generating about -0.05 per unit of volatility. If you would invest  45.00  in Pacific Green Technologies on February 6, 2024 and sell it today you would lose (4.00) from holding Pacific Green Technologies or give up 8.89% of portfolio value over 90 days.

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

Thermal Energy International  vs.  Pacific Green Technologies

Thermal Energy Inter

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thermal Energy International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pacific Green Techno

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pacific Green Technologies are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile basic indicators, Pacific Green disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Thermal Energy and Pacific Green

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

The idea behind Thermal Energy International and Pacific Green 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.