Correlation Between Bloom Energy and ADS TEC

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

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

Diversification Opportunities for Bloom Energy and ADS TEC

0.28

Correlation Coefficient

Bloom Energy  ADS TEC

Modest diversification

The 3 months correlation between Bloom and ADS is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Bloom Energy Corp and ADS TEC ENERGY PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADS TEC ENERGY and Bloom Energy 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 Bloom Energy Corp are associated (or correlated) with ADS TEC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADS TEC ENERGY has no effect on the direction of Bloom Energy i.e., Bloom Energy and ADS TEC go up and down completely randomly.

Pair Corralation between Bloom Energy and ADS TEC

Allowing for the 90-day total investment horizon Bloom Energy is expected to generate 9.11 times less return on investment than ADS TEC. But when comparing it to its historical volatility, Bloom Energy Corp is 15.0 times less risky than ADS TEC. It trades about 0.2 of its potential returns per unit of risk. ADS TEC ENERGY PLC is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  212.00  in ADS TEC ENERGY PLC on August 31, 2024 and sell it today you would earn a total of  130.00  from holding ADS TEC ENERGY PLC or generate 61.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	93.75%
Values	Daily Returns

Bloom Energy Corp  vs.  ADS TEC ENERGY PLC

Bloom Energy Corp

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bloom Energy Corp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, Bloom Energy exhibited solid returns over the last few months and may actually be approaching a breakup point.

ADS TEC ENERGY

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ADS TEC ENERGY PLC are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady technical and fundamental indicators, ADS TEC showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bloom Energy and ADS TEC

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

The idea behind Bloom Energy Corp and ADS TEC ENERGY PLC 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.