Correlation Between CBAK Energy and Chardan NexTech

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

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

Diversification Opportunities for CBAK Energy and Chardan NexTech

-0.02

Correlation Coefficient

CBAK Energy  Chardan NexTech

Good diversification

The 3 months correlation between CBAK and Chardan is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding CBAK Energy Technology and Chardan NexTech Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chardan NexTech Acqu and CBAK 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 CBAK Energy Technology are associated (or correlated) with Chardan NexTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chardan NexTech Acqu has no effect on the direction of CBAK Energy i.e., CBAK Energy and Chardan NexTech go up and down completely randomly.

Pair Corralation between CBAK Energy and Chardan NexTech

Given the investment horizon of 90 days CBAK Energy Technology is expected to generate 0.45 times more return on investment than Chardan NexTech. However, CBAK Energy Technology is 2.23 times less risky than Chardan NexTech. It trades about 0.01 of its potential returns per unit of risk. Chardan NexTech Acquisition is currently generating about -0.02 per unit of risk. If you would invest  114.00  in CBAK Energy Technology on January 20, 2024 and sell it today you would lose (18.00) from holding CBAK Energy Technology or give up 15.79% of portfolio value over 90 days.

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

CBAK Energy Technology  vs.  Chardan NexTech Acquisition

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 unsteady 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.

Chardan NexTech Acqu

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Chardan NexTech Acquisition are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak essential indicators, Chardan NexTech demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CBAK Energy and Chardan NexTech

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

The idea behind CBAK Energy Technology and Chardan NexTech Acquisition 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.