Correlation Between Ocean Power and CBAK Energy
Can any of the company-specific risk be diversified away by investing in both Ocean Power 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 Ocean Power and CBAK Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ocean Power Technologies and CBAK Energy Technology, you can compare the effects of market volatilities on Ocean Power 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 Ocean Power with a short position of CBAK Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ocean Power and CBAK Energy.
Diversification Opportunities for Ocean Power and CBAK Energy
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ocean and CBAK is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Ocean Power Technologies 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 Ocean 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 Ocean Power Technologies 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 Ocean Power i.e., Ocean Power and CBAK Energy go up and down completely randomly.
Pair Corralation between Ocean Power and CBAK Energy
Given the investment horizon of 90 days Ocean Power Technologies is expected to generate 1.18 times more return on investment than CBAK Energy. However, Ocean Power is 1.18 times more volatile than CBAK Energy Technology. It trades about 0.22 of its potential returns per unit of risk. CBAK Energy Technology is currently generating about -0.27 per unit of risk. If you would invest 15.00 in Ocean Power Technologies on August 28, 2024 and sell it today you would earn a total of 3.00 from holding Ocean Power Technologies or generate 20.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Ocean Power Technologies vs. CBAK Energy Technology
Performance |
| Timeline |
| Ocean Power Technologies |
| CBAK Energy Technology |
Ocean Power and CBAK Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ocean Power and CBAK Energy
The main advantage of trading using opposite Ocean Power and CBAK Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ocean Power 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.| Ocean Power vs. Pioneer Power Solutions | Ocean Power vs. CBAK Energy Technology | Ocean Power vs. Ideal Power | Ocean Power vs. Expion360 |
| 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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