Correlation Between CBAK Energy and Sunrise New

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

Diversification Opportunities for CBAK Energy and Sunrise New

0.83

Correlation Coefficient

CBAK Energy  Sunrise New

Very poor diversification

The 3 months correlation between CBAK and Sunrise is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding CBAK Energy Technology and Sunrise New Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunrise New Energy 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 Sunrise New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunrise New Energy has no effect on the direction of CBAK Energy i.e., CBAK Energy and Sunrise New go up and down completely randomly.

Pair Corralation between CBAK Energy and Sunrise New

Given the investment horizon of 90 days CBAK Energy Technology is expected to generate 1.56 times more return on investment than Sunrise New. However, CBAK Energy is 1.56 times more volatile than Sunrise New Energy. It trades about 0.16 of its potential returns per unit of risk. Sunrise New Energy is currently generating about 0.21 per unit of risk. If you would invest  89.00  in CBAK Energy Technology on October 8, 2024 and sell it today you would earn a total of  15.00  from holding CBAK Energy Technology or generate 16.85% return on investment over 90 days.

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

CBAK Energy Technology  vs.  Sunrise New Energy

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 comparatively stable basic indicators, CBAK Energy is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Sunrise New Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sunrise New Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Sunrise New is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with CBAK Energy and Sunrise New

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

The idea behind CBAK Energy Technology and Sunrise New Energy 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.