Correlation Between Plug Power and Natcore Technology

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

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

Diversification Opportunities for Plug Power and Natcore Technology

0.0

Correlation Coefficient

Plug Power  Natcore Technology

Pay attention - limited upside

The 3 months correlation between Plug and Natcore is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Plug Power and Natcore Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natcore Technology and Plug 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 Plug Power are associated (or correlated) with Natcore Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natcore Technology has no effect on the direction of Plug Power i.e., Plug Power and Natcore Technology go up and down completely randomly.

Pair Corralation between Plug Power and Natcore Technology

Given the investment horizon of 90 days Plug Power is expected to under-perform the Natcore Technology. But the stock apears to be less risky and, when comparing its historical volatility, Plug Power is 8.18 times less risky than Natcore Technology. The stock trades about -0.04 of its potential returns per unit of risk. The Natcore Technology is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  0.05  in Natcore Technology on January 20, 2024 and sell it today you would lose (0.05) from holding Natcore Technology or give up 100.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.58%
Values	Daily Returns

Plug Power  vs.  Natcore Technology

Plug Power

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Plug Power are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Plug Power may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Natcore Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Natcore Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Natcore Technology is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Plug Power and Natcore Technology

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

The idea behind Plug Power and Natcore 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.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.