Correlation Between AFC Energy and CBAK Energy
Can any of the company-specific risk be diversified away by investing in both AFC Energy and CBAK 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 AFC Energy and CBAK Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AFC Energy plc and CBAK Energy Technology, you can compare the effects of market volatilities on AFC Energy and CBAK 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 AFC Energy with a short position of CBAK Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of AFC Energy and CBAK Energy.
Diversification Opportunities for AFC Energy and CBAK Energy
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between AFC and CBAK is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding AFC Energy plc and CBAK Energy Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CBAK Energy Technology and AFC 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 AFC Energy plc are associated (or correlated) with CBAK Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CBAK Energy Technology has no effect on the direction of AFC Energy i.e., AFC Energy and CBAK Energy go up and down completely randomly.
Pair Corralation between AFC Energy and CBAK Energy
Assuming the 90 days horizon AFC Energy plc is expected to generate 1.89 times more return on investment than CBAK Energy. However, AFC Energy is 1.89 times more volatile than CBAK Energy Technology. It trades about 0.14 of its potential returns per unit of risk. CBAK Energy Technology is currently generating about -0.19 per unit of risk. If you would invest 11.00 in AFC Energy plc on August 28, 2024 and sell it today you would earn a total of 2.00 from holding AFC Energy plc or generate 18.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AFC Energy plc vs. CBAK Energy Technology
Performance |
| Timeline |
| AFC Energy plc |
| CBAK Energy Technology |
AFC Energy and CBAK Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AFC Energy and CBAK Energy
The main advantage of trading using opposite AFC Energy and CBAK Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AFC Energy position performs unexpectedly, CBAK 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 CBAK Energy will offset losses from the drop in CBAK Energy's long position.| AFC Energy vs. Legrand SA ADR | AFC Energy vs. Loop Energy | AFC Energy vs. Sunrise New Energy | AFC Energy vs. Alfen NV |
| CBAK Energy vs. Pioneer Power Solutions | CBAK Energy vs. Ocean Power Technologies | CBAK Energy vs. Ideal Power | CBAK Energy vs. Expion360 |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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