Correlation Between Chardan NexTech and Hydrogen Engine

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

By analyzing existing cross correlation between Chardan NexTech Acquisition and Hydrogen Engine Center, you can compare the effects of market volatilities on Chardan NexTech and Hydrogen Engine 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 Chardan NexTech with a short position of Hydrogen Engine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chardan NexTech and Hydrogen Engine.

Diversification Opportunities for Chardan NexTech and Hydrogen Engine

-0.39

Correlation Coefficient

Chardan NexTech  Hydrogen Engine

Very good diversification

The 3 months correlation between Chardan and Hydrogen is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Chardan NexTech Acquisition and Hydrogen Engine Center in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hydrogen Engine Center and Chardan NexTech 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 Chardan NexTech Acquisition are associated (or correlated) with Hydrogen Engine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hydrogen Engine Center has no effect on the direction of Chardan NexTech i.e., Chardan NexTech and Hydrogen Engine go up and down completely randomly.

Pair Corralation between Chardan NexTech and Hydrogen Engine

Given the investment horizon of 90 days Chardan NexTech Acquisition is expected to under-perform the Hydrogen Engine. But the stock apears to be less risky and, when comparing its historical volatility, Chardan NexTech Acquisition is 22.24 times less risky than Hydrogen Engine. The stock trades about -0.14 of its potential returns per unit of risk. The Hydrogen Engine Center is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  0.65  in Hydrogen Engine Center on November 29, 2024 and sell it today you would earn a total of  3.95  from holding Hydrogen Engine Center or generate 607.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Chardan NexTech Acquisition  vs.  Hydrogen Engine Center

Chardan NexTech Acqu

Risk-Adjusted Performance

Very Weak

Over the last 90 days Chardan NexTech Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's essential indicators remain fairly strong which may send shares a bit higher in March 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Hydrogen Engine Center

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hydrogen Engine Center are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Hydrogen Engine reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chardan NexTech and Hydrogen Engine

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

The idea behind Chardan NexTech Acquisition and Hydrogen Engine Center 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.