Correlation Between Bloom Energy and CBAK Energy

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

Diversification Opportunities for Bloom Energy and CBAK Energy

0.0

Correlation Coefficient

Bloom Energy  CBAK Energy

Pay attention - limited upside

The 3 months correlation between Bloom and CBAK is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Bloom Energy Corp 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 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 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 Bloom Energy i.e., Bloom Energy and CBAK Energy go up and down completely randomly.

Pair Corralation between Bloom Energy and CBAK Energy

Allowing for the 90-day total investment horizon Bloom Energy Corp is expected to under-perform the CBAK Energy. In addition to that, Bloom Energy is 1.02 times more volatile than CBAK Energy Technology. It trades about -0.03 of its total potential returns per unit of risk. CBAK Energy Technology is currently generating about 0.05 per unit of volatility. If you would invest  78.00  in CBAK Energy Technology on January 26, 2024 and sell it today you would earn a total of  27.00  from holding CBAK Energy Technology or generate 34.62% return on investment over 90 days.

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

Bloom Energy Corp  vs.  CBAK Energy Technology

Bloom Energy Corp

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Bloom Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in May 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

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 comparatively stable basic indicators, CBAK Energy is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Bloom Energy and CBAK Energy

The main advantage of trading using opposite Bloom Energy and CBAK Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bloom 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 Bloom Energy Corp 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.