Correlation Between FuelCell Energy and CBAK Energy

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Can any of the company-specific risk be diversified away by investing in both FuelCell 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 FuelCell 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 FuelCell Energy and CBAK Energy Technology, you can compare the effects of market volatilities on FuelCell 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 FuelCell Energy with a short position of CBAK Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of FuelCell Energy and CBAK Energy.

Diversification Opportunities for FuelCell Energy and CBAK Energy

0.02
  Correlation Coefficient

Significant diversification

The 3 months correlation between FuelCell and CBAK is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding FuelCell Energy 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 FuelCell 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 FuelCell Energy 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 FuelCell Energy i.e., FuelCell Energy and CBAK Energy go up and down completely randomly.

Pair Corralation between FuelCell Energy and CBAK Energy

Given the investment horizon of 90 days FuelCell Energy is expected to under-perform the CBAK Energy. In addition to that, FuelCell Energy is 1.36 times more volatile than CBAK Energy Technology. It trades about -0.05 of its total potential returns per unit of risk. CBAK Energy Technology is currently generating about 0.01 per unit of volatility. If you would invest  119.00  in CBAK Energy Technology on August 28, 2024 and sell it today you would lose (29.00) from holding CBAK Energy Technology or give up 24.37% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

FuelCell Energy  vs.  CBAK Energy Technology

 Performance 
       Timeline  
FuelCell Energy 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days FuelCell Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, FuelCell Energy is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.
CBAK Energy Technology 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days CBAK Energy Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

FuelCell Energy and CBAK Energy Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with FuelCell Energy and CBAK Energy

The main advantage of trading using opposite FuelCell Energy and CBAK Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FuelCell 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.
The idea behind FuelCell Energy and CBAK Energy Technology 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.

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