Correlation Between ADS TEC and Chardan NexTech

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

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

Diversification Opportunities for ADS TEC and Chardan NexTech

0.11

Correlation Coefficient

ADS TEC  Chardan NexTech

Average diversification

The 3 months correlation between ADS and Chardan is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding ADS TEC ENERGY PLC 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 ADS TEC 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 ADS TEC ENERGY PLC 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 ADS TEC i.e., ADS TEC and Chardan NexTech go up and down completely randomly.

Pair Corralation between ADS TEC and Chardan NexTech

Assuming the 90 days horizon ADS TEC ENERGY PLC is expected to under-perform the Chardan NexTech. But the stock apears to be less risky and, when comparing its historical volatility, ADS TEC ENERGY PLC is 2.81 times less risky than Chardan NexTech. The stock trades about -0.06 of its potential returns per unit of risk. The Chardan NexTech Acquisition is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1.37  in Chardan NexTech Acquisition on December 20, 2024 and sell it today you would earn a total of  1.32  from holding Chardan NexTech Acquisition or generate 96.35% return on investment over 90 days.

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

ADS TEC ENERGY PLC  vs.  Chardan NexTech Acquisition

ADS TEC ENERGY

Risk-Adjusted Performance

Very Weak

Over the last 90 days ADS TEC ENERGY PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Chardan NexTech Acqu

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Chardan NexTech Acquisition are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent forward indicators, Chardan NexTech showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ADS TEC and Chardan NexTech

The main advantage of trading using opposite ADS TEC and Chardan NexTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ADS TEC 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 ADS TEC ENERGY PLC 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.