Correlation Between CBAK Energy and Enersys

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

Diversification Opportunities for CBAK Energy and Enersys

0.76

Correlation Coefficient

CBAK Energy  Enersys

Poor diversification

The 3 months correlation between CBAK and Enersys is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding CBAK Energy Technology and Enersys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enersys 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 Enersys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enersys has no effect on the direction of CBAK Energy i.e., CBAK Energy and Enersys go up and down completely randomly.

Pair Corralation between CBAK Energy and Enersys

Given the investment horizon of 90 days CBAK Energy Technology is expected to generate 4.75 times more return on investment than Enersys. However, CBAK Energy is 4.75 times more volatile than Enersys. It trades about 0.08 of its potential returns per unit of risk. Enersys is currently generating about -0.08 per unit of risk. If you would invest  92.00  in CBAK Energy Technology on October 5, 2024 and sell it today you would earn a total of  6.00  from holding CBAK Energy Technology or generate 6.52% return on investment over 90 days.

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

CBAK Energy Technology  vs.  Enersys

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 latest inconsistent performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Enersys

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Enersys has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Enersys is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with CBAK Energy and Enersys

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

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