Correlation Between Seagate Technology and Emeren

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

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

Diversification Opportunities for Seagate Technology and Emeren

0.54

Correlation Coefficient

Seagate Technology  Emeren

Very weak diversification

The 3 months correlation between Seagate and Emeren is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Seagate Technology PLC and Emeren Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emeren Group and Seagate Technology 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 Seagate Technology PLC 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 Seagate Technology i.e., Seagate Technology and Emeren go up and down completely randomly.

Pair Corralation between Seagate Technology and Emeren

Considering the 90-day investment horizon Seagate Technology PLC is expected to generate 0.55 times more return on investment than Emeren. However, Seagate Technology PLC is 1.83 times less risky than Emeren. It trades about 0.04 of its potential returns per unit of risk. Emeren Group is currently generating about -0.03 per unit of risk. If you would invest  6,616  in Seagate Technology PLC on January 25, 2024 and sell it today you would earn a total of  2,095  from holding Seagate Technology PLC or generate 31.67% return on investment over 90 days.

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

Seagate Technology PLC  vs.  Emeren Group

Seagate Technology PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Seagate Technology PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Seagate Technology is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Emeren Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Emeren Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Seagate Technology and Emeren

The main advantage of trading using opposite Seagate Technology and Emeren positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seagate Technology 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.

The idea behind Seagate Technology PLC and Emeren Group 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.