Correlation Between CBAK Energy and Energy Focu

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

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

Diversification Opportunities for CBAK Energy and Energy Focu

-0.2

Correlation Coefficient

CBAK Energy  Energy Focu

Good diversification

The 3 months correlation between CBAK and Energy is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding CBAK Energy Technology and Energy Focu in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy Focu and CBAK 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 CBAK Energy Technology are associated (or correlated) with Energy Focu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy Focu has no effect on the direction of CBAK Energy i.e., CBAK Energy and Energy Focu go up and down completely randomly.

Pair Corralation between CBAK Energy and Energy Focu

Given the investment horizon of 90 days CBAK Energy Technology is expected to under-perform the Energy Focu. But the stock apears to be less risky and, when comparing its historical volatility, CBAK Energy Technology is 1.01 times less risky than Energy Focu. The stock trades about -0.05 of its potential returns per unit of risk. The Energy Focu is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  125.00  in Energy Focu on October 15, 2024 and sell it today you would earn a total of  8.00  from holding Energy Focu or generate 6.4% return on investment over 90 days.

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

CBAK Energy Technology  vs.  Energy Focu

CBAK Energy Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CBAK Energy Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Energy Focu

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Energy Focu are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile basic indicators, Energy Focu demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CBAK Energy and Energy Focu

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

The idea behind CBAK Energy Technology and Energy Focu 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.