Correlation Between Chardan NexTech and Ideal Power

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

Diversification Opportunities for Chardan NexTech and Ideal Power

0.27

Correlation Coefficient

Chardan NexTech  Ideal Power

Modest diversification

The 3 months correlation between Chardan and Ideal is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Chardan NexTech Acquisition and Ideal Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ideal Power 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 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 Chardan NexTech i.e., Chardan NexTech and Ideal Power go up and down completely randomly.

Pair Corralation between Chardan NexTech and Ideal Power

Given the investment horizon of 90 days Chardan NexTech Acquisition is expected to under-perform the Ideal Power. In addition to that, Chardan NexTech is 1.53 times more volatile than Ideal Power. It trades about -0.11 of its total potential returns per unit of risk. Ideal Power is currently generating about 0.03 per unit of volatility. If you would invest  745.00  in Ideal Power on October 23, 2024 and sell it today you would earn a total of  6.00  from holding Ideal Power or generate 0.81% return on investment over 90 days.

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

Chardan NexTech Acquisition  vs.  Ideal Power

Chardan NexTech Acqu

Risk-Adjusted Performance

0 of 100

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 February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Ideal Power

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ideal Power are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Ideal Power may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Chardan NexTech and Ideal Power

The main advantage of trading using opposite Chardan NexTech and Ideal Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chardan NexTech 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 Chardan NexTech Acquisition 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.