Correlation Between Flux Power and Ocean Power
Can any of the company-specific risk be diversified away by investing in both Flux Power and Ocean Power 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 Flux Power and Ocean Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flux Power Holdings and Ocean Power Technologies, you can compare the effects of market volatilities on Flux Power and Ocean Power 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 Flux Power with a short position of Ocean Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flux Power and Ocean Power.
Diversification Opportunities for Flux Power and Ocean Power
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Flux and Ocean is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Flux Power Holdings and Ocean Power Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ocean Power Technologies and Flux Power 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 Flux Power Holdings are associated (or correlated) with Ocean Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ocean Power Technologies has no effect on the direction of Flux Power i.e., Flux Power and Ocean Power go up and down completely randomly.
Pair Corralation between Flux Power and Ocean Power
Given the investment horizon of 90 days Flux Power Holdings is expected to under-perform the Ocean Power. But the stock apears to be less risky and, when comparing its historical volatility, Flux Power Holdings is 2.5 times less risky than Ocean Power. The stock trades about -0.04 of its potential returns per unit of risk. The Ocean Power Technologies is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 19.00 in Ocean Power Technologies on August 31, 2024 and sell it today you would earn a total of 31.00 from holding Ocean Power Technologies or generate 163.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Flux Power Holdings vs. Ocean Power Technologies
Performance |
| Timeline |
| Flux Power Holdings |
| Ocean Power Technologies |
Flux Power and Ocean Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flux Power and Ocean Power
The main advantage of trading using opposite Flux Power and Ocean Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flux Power position performs unexpectedly, Ocean Power 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 Ocean Power will offset losses from the drop in Ocean Power's long position.| Flux Power vs. Plug Power | Flux Power vs. FREYR Battery SA | Flux Power vs. FuelCell Energy | Flux Power vs. Enovix Corp |
| Ocean Power vs. Pioneer Power Solutions | Ocean Power vs. CBAK Energy Technology | Ocean Power vs. Ideal Power | Ocean Power 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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