Can any of the company-specific risk be diversified away by investing in both Bloom Energy and Amprius Technologies 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 Bloom Energy and Amprius Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bloom Energy Corp and Amprius Technologies, you can compare the effects of market volatilities on Bloom Energy and Amprius Technologies 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 Bloom Energy with a short position of Amprius Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bloom Energy and Amprius Technologies.
Diversification Opportunities for Bloom Energy and Amprius Technologies
The 3 months correlation between Bloom and Amprius is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Bloom Energy Corp and Amprius Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amprius Technologies and Bloom 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 Bloom Energy Corp are associated (or correlated) with Amprius Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amprius Technologies has no effect on the direction of Bloom Energy i.e., Bloom Energy and Amprius Technologies go up and down completely randomly.
Pair Corralation between Bloom Energy and Amprius Technologies
Allowing for the 90-day total investment horizon Bloom Energy Corp is expected to generate 0.53 times more return on investment than Amprius Technologies. However, Bloom Energy Corp is 1.87 times less risky than Amprius Technologies. It trades about 0.51 of its potential returns per unit of risk. Amprius Technologies is currently generating about 0.17 per unit of risk. If you would invest 1,009 in Bloom Energy Corp on September 5, 2023 and sell it today you would earn a total of 529.00 from holding Bloom Energy Corp or generate 52.43% return on investment over 90 days.
Compared to the overall equity markets, risk-adjusted returns on investments in Bloom Energy Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Bloom Energy may actually be approaching a critical reversion point that can send shares even higher in January 2024.
Compared to the overall equity markets, risk-adjusted returns on investments in Amprius Technologies are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Amprius Technologies may actually be approaching a critical reversion point that can send shares even higher in January 2024.
Bloom Energy and Amprius Technologies Volatility Contrast
Predicted Return Density
Pair Trading with Bloom Energy and Amprius Technologies
The main advantage of trading using opposite Bloom Energy and Amprius Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bloom Energy position performs unexpectedly, Amprius Technologies 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 Amprius Technologies will offset losses from the drop in Amprius Technologies' long position.
The idea behind Bloom Energy Corp and Amprius Technologies 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.
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Check effects of mean-variance optimization against your current asset allocation
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