Correlation Between ADS TEC and Eos Energy

Can any of the company-specific risk be diversified away by investing in both ADS TEC and Eos 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 ADS TEC and Eos Energy 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 Eos Energy Enterprises, you can compare the effects of market volatilities on ADS TEC and Eos 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 ADS TEC with a short position of Eos Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of ADS TEC and Eos Energy.

Diversification Opportunities for ADS TEC and Eos Energy

0.87

Correlation Coefficient

ADS TEC  Eos Energy

Very poor diversification

The 3 months correlation between ADS and Eos is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding ADS TEC ENERGY PLC and Eos Energy Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eos Energy Enterprises 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 Eos Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eos Energy Enterprises has no effect on the direction of ADS TEC i.e., ADS TEC and Eos Energy go up and down completely randomly.

Pair Corralation between ADS TEC and Eos Energy

Assuming the 90 days horizon ADS TEC ENERGY PLC is expected to generate 0.53 times more return on investment than Eos Energy. However, ADS TEC ENERGY PLC is 1.89 times less risky than Eos Energy. It trades about -0.02 of its potential returns per unit of risk. Eos Energy Enterprises is currently generating about -0.16 per unit of risk. If you would invest  360.00  in ADS TEC ENERGY PLC on December 27, 2024 and sell it today you would lose (53.00) from holding ADS TEC ENERGY PLC or give up 14.72% of portfolio value over 90 days.

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

ADS TEC ENERGY PLC  vs.  Eos Energy Enterprises

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 latest unsteady performance, the Stock's technical and fundamental indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Eos Energy Enterprises

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eos Energy Enterprises 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.

Pair Trading with ADS TEC and Eos Energy

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

The idea behind ADS TEC ENERGY PLC and Eos Energy Enterprises 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.