Correlation Between CBAK Energy and Signify NV

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

Diversification Opportunities for CBAK Energy and Signify NV

0.03

Correlation Coefficient

CBAK Energy  Signify NV

Significant diversification

The 3 months correlation between CBAK and Signify is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding CBAK Energy Technology and Signify NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Signify NV 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 Signify NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Signify NV has no effect on the direction of CBAK Energy i.e., CBAK Energy and Signify NV go up and down completely randomly.

Pair Corralation between CBAK Energy and Signify NV

Given the investment horizon of 90 days CBAK Energy Technology is expected to under-perform the Signify NV. In addition to that, CBAK Energy is 1.45 times more volatile than Signify NV. It trades about -0.15 of its total potential returns per unit of risk. Signify NV is currently generating about 0.04 per unit of volatility. If you would invest  1,092  in Signify NV on December 29, 2024 and sell it today you would earn a total of  38.00  from holding Signify NV or generate 3.48% return on investment over 90 days.

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

CBAK Energy Technology  vs.  Signify NV

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.

Signify NV

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Signify NV are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Signify NV is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with CBAK Energy and Signify NV

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

The idea behind CBAK Energy Technology and Signify NV 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.