Correlation Between Ads Tec and CBAK Energy

Can any of the company-specific risk be diversified away by investing in both Ads Tec 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 Ads Tec and CBAK Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ads Tec Energy and CBAK Energy Technology, you can compare the effects of market volatilities on Ads Tec 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 Ads Tec with a short position of CBAK Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ads Tec and CBAK Energy.

Diversification Opportunities for Ads Tec and CBAK Energy

-0.27

Correlation Coefficient

Ads Tec  CBAK Energy

Very good diversification

The 3 months correlation between Ads and CBAK is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Ads Tec 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 Ads Tec 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 Ads Tec 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 Ads Tec i.e., Ads Tec and CBAK Energy go up and down completely randomly.

Pair Corralation between Ads Tec and CBAK Energy

Given the investment horizon of 90 days Ads Tec Energy is expected to generate 0.89 times more return on investment than CBAK Energy. However, Ads Tec Energy is 1.13 times less risky than CBAK Energy. It trades about 0.09 of its potential returns per unit of risk. CBAK Energy Technology is currently generating about -0.06 per unit of risk. If you would invest  959.00  in Ads Tec Energy on January 19, 2024 and sell it today you would earn a total of  121.00  from holding Ads Tec Energy or generate 12.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Ads Tec Energy  vs.  CBAK Energy Technology

Ads Tec Energy

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ads Tec Energy are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Ads Tec exhibited solid returns over the last few months and may actually be approaching a breakup point.

CBAK Energy Technology

Risk-Adjusted Performance

0 of 100

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 weak 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.

Pair Trading with Ads Tec and CBAK Energy

The main advantage of trading using opposite Ads Tec and CBAK Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ads Tec 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 Ads Tec 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.