Correlation Between Espey Mfg and CBAK Energy
Can any of the company-specific risk be diversified away by investing in both Espey Mfg 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 Espey Mfg and CBAK Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Espey Mfg Electronics and CBAK Energy Technology, you can compare the effects of market volatilities on Espey Mfg 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 Espey Mfg with a short position of CBAK Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Espey Mfg and CBAK Energy.
Diversification Opportunities for Espey Mfg and CBAK Energy
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Espey and CBAK is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Espey Mfg Electronics 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 Espey Mfg 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 Espey Mfg Electronics 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 Espey Mfg i.e., Espey Mfg and CBAK Energy go up and down completely randomly.
Pair Corralation between Espey Mfg and CBAK Energy
Considering the 90-day investment horizon Espey Mfg Electronics is expected to generate 0.6 times more return on investment than CBAK Energy. However, Espey Mfg Electronics is 1.67 times less risky than CBAK Energy. It trades about 0.04 of its potential returns per unit of risk. CBAK Energy Technology is currently generating about 0.01 per unit of risk. If you would invest 1,846 in Espey Mfg Electronics on November 26, 2024 and sell it today you would earn a total of 764.00 from holding Espey Mfg Electronics or generate 41.39% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Espey Mfg Electronics vs. CBAK Energy Technology
Performance |
Timeline |
Espey Mfg Electronics |
CBAK Energy Technology |
Espey Mfg and CBAK Energy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Espey Mfg and CBAK Energy
The main advantage of trading using opposite Espey Mfg and CBAK Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Espey Mfg 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.Espey Mfg vs. Chicago Rivet Machine | ||
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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