Correlation Between CBAK Energy and Ideal Power

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

Diversification Opportunities for CBAK Energy and Ideal Power

0.69

Correlation Coefficient

CBAK Energy  Ideal Power

Poor diversification

The 3 months correlation between CBAK and Ideal is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding CBAK Energy Technology and Ideal Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ideal Power 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 Ideal Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ideal Power has no effect on the direction of CBAK Energy i.e., CBAK Energy and Ideal Power go up and down completely randomly.

Pair Corralation between CBAK Energy and Ideal Power

Given the investment horizon of 90 days CBAK Energy Technology is expected to generate 0.82 times more return on investment than Ideal Power. However, CBAK Energy Technology is 1.21 times less risky than Ideal Power. It trades about -0.15 of its potential returns per unit of risk. Ideal Power is currently generating about -0.16 per unit of risk. If you would invest  108.00  in CBAK Energy Technology on December 28, 2024 and sell it today you would lose (28.00) from holding CBAK Energy Technology or give up 25.93% of portfolio value over 90 days.

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

CBAK Energy Technology  vs.  Ideal Power

CBAK Energy Technology

Risk-Adjusted Performance

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 April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Ideal Power

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ideal Power has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with CBAK Energy and Ideal Power

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

The idea behind CBAK Energy Technology and Ideal Power 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.