Correlation Between Superior Plus and Bloom Energy

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

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

Diversification Opportunities for Superior Plus and Bloom Energy

-0.53

Correlation Coefficient

Superior Plus  Bloom Energy

Excellent diversification

The 3 months correlation between Superior and Bloom is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Superior Plus Corp and Bloom Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bloom Energy and Superior Plus 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 Superior Plus Corp 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 Superior Plus i.e., Superior Plus and Bloom Energy go up and down completely randomly.

Pair Corralation between Superior Plus and Bloom Energy

Assuming the 90 days horizon Superior Plus Corp is expected to generate 0.34 times more return on investment than Bloom Energy. However, Superior Plus Corp is 2.97 times less risky than Bloom Energy. It trades about -0.11 of its potential returns per unit of risk. Bloom Energy is currently generating about -0.05 per unit of risk. If you would invest  431.00  in Superior Plus Corp on October 10, 2024 and sell it today you would lose (15.00) from holding Superior Plus Corp or give up 3.48% of portfolio value over 90 days.

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

Superior Plus Corp  vs.  Bloom Energy

Superior Plus Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Superior Plus Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile 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.

Bloom Energy

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bloom Energy are ranked lower than 14 (%) 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 Superior Plus and Bloom Energy

The main advantage of trading using opposite Superior Plus and Bloom Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Superior Plus 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 Superior Plus Corp 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.