Correlation Between China Longyuan and Brenmiller Energy

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

By analyzing existing cross correlation between China Longyuan Power and Brenmiller Energy Ltd, you can compare the effects of market volatilities on China Longyuan and Brenmiller 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 China Longyuan with a short position of Brenmiller Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Longyuan and Brenmiller Energy.

Diversification Opportunities for China Longyuan and Brenmiller Energy

0.87

Correlation Coefficient

China Longyuan  Brenmiller Energy

Very poor diversification

The 24 months correlation between China and Brenmiller is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding China Longyuan Power and Brenmiller Energy Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brenmiller Energy and China Longyuan 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 China Longyuan Power are associated (or correlated) with Brenmiller Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brenmiller Energy has no effect on the direction of China Longyuan i.e., China Longyuan and Brenmiller Energy go up and down completely randomly.

Pair Corralation between China Longyuan and Brenmiller Energy

Assuming the 90 days horizon China Longyuan Power is expected to generate 0.73 times more return on investment than Brenmiller Energy. However, China Longyuan Power is 1.38 times less risky than Brenmiller Energy. It trades about 0.21 of its potential returns per unit of risk. Brenmiller Energy Ltd is currently generating about 0.0 per unit of risk. If you would invest  59.00  in China Longyuan Power on February 2, 2024 and sell it today you would earn a total of  16.00  from holding China Longyuan Power or generate 27.12% return on investment over 90 days.

Time Period	24 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.65%
Values	Daily Returns

China Longyuan Power  vs.  Brenmiller Energy Ltd

China Longyuan Power

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days China Longyuan Power has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Brenmiller Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brenmiller Energy Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with China Longyuan and Brenmiller Energy

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

The idea behind China Longyuan Power and Brenmiller Energy Ltd 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.