Correlation Between Bloom Energy and King Resources

Can any of the company-specific risk be diversified away by investing in both Bloom Energy and King Resources 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 King Resources 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 King Resources, you can compare the effects of market volatilities on Bloom Energy and King Resources 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 King Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bloom Energy and King Resources.

Diversification Opportunities for Bloom Energy and King Resources

0.02

Correlation Coefficient

Bloom Energy  King Resources

Significant diversification

The 3 months correlation between Bloom and King is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Bloom Energy Corp and King Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on King Resources 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 King Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of King Resources has no effect on the direction of Bloom Energy i.e., Bloom Energy and King Resources go up and down completely randomly.

Pair Corralation between Bloom Energy and King Resources

Allowing for the 90-day total investment horizon Bloom Energy is expected to generate 96.53 times less return on investment than King Resources. But when comparing it to its historical volatility, Bloom Energy Corp is 6.55 times less risky than King Resources. It trades about 0.01 of its potential returns per unit of risk. King Resources is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  0.01  in King Resources on December 26, 2024 and sell it today you would earn a total of  0.01  from holding King Resources or generate 100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Bloom Energy Corp  vs.  King Resources

Bloom Energy Corp

Risk-Adjusted Performance

Weak

Over the last 90 days Bloom Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Bloom Energy is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

King Resources

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in King Resources are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting technical and fundamental indicators, King Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bloom Energy and King Resources

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

The idea behind Bloom Energy Corp and King Resources 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.