Correlation Between Ballard Power and Altra Industrial

Can any of the company-specific risk be diversified away by investing in both Ballard Power and Altra Industrial 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 Ballard Power and Altra Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ballard Power Systems and Altra Industrial Motion, you can compare the effects of market volatilities on Ballard Power and Altra Industrial 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 Ballard Power with a short position of Altra Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ballard Power and Altra Industrial.

Diversification Opportunities for Ballard Power and Altra Industrial

-0.63

Correlation Coefficient

Ballard Power  Altra Industrial

Excellent diversification

The 3 months correlation between Ballard and Altra is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Ballard Power Systems and Altra Industrial Motion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altra Industrial Motion and Ballard 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 Ballard Power Systems are associated (or correlated) with Altra Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altra Industrial Motion has no effect on the direction of Ballard Power i.e., Ballard Power and Altra Industrial go up and down completely randomly.

Pair Corralation between Ballard Power and Altra Industrial

If you would invest  6,198  in Altra Industrial Motion on January 26, 2024 and sell it today you would earn a total of  0.00  from holding Altra Industrial Motion or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	4.76%
Values	Daily Returns

Ballard Power Systems  vs.  Altra Industrial Motion

Ballard Power Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ballard Power Systems has generated negative risk-adjusted returns adding no value to investors with long positions. Even with abnormal performance in the last few months, the Stock's fundamental indicators remain relatively invariable which may send shares a bit higher in May 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Altra Industrial Motion

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Altra Industrial Motion has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, Altra Industrial is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Ballard Power and Altra Industrial

The main advantage of trading using opposite Ballard Power and Altra Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ballard Power position performs unexpectedly, Altra Industrial 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 Altra Industrial will offset losses from the drop in Altra Industrial's long position.

The idea behind Ballard Power Systems and Altra Industrial Motion 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.