Correlation Between Alfen NV and Bloom Energy

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

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

Diversification Opportunities for Alfen NV and Bloom Energy

-0.66

Correlation Coefficient

Alfen NV  Bloom Energy

Excellent diversification

The 3 months correlation between Alfen and Bloom is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Alfen NV and Bloom Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bloom Energy and Alfen NV 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 Alfen NV are associated (or correlated) with Bloom Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bloom Energy has no effect on the direction of Alfen NV i.e., Alfen NV and Bloom Energy go up and down completely randomly.

Pair Corralation between Alfen NV and Bloom Energy

Assuming the 90 days horizon Alfen NV is expected to generate 0.54 times more return on investment than Bloom Energy. However, Alfen NV is 1.85 times less risky than Bloom Energy. It trades about -0.03 of its potential returns per unit of risk. Bloom Energy is currently generating about -0.09 per unit of risk. If you would invest  1,135  in Alfen NV on September 23, 2024 and sell it today you would lose (21.00) from holding Alfen NV or give up 1.85% of portfolio value over 90 days.

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

Alfen NV  vs.  Bloom Energy

Alfen NV

Risk-Adjusted Performance

0 of 100

Very Weak

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

Bloom Energy

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bloom Energy are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Bloom Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alfen NV and Bloom Energy

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

The idea behind Alfen NV and Bloom Energy 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.