Correlation Between Electrovaya Common and Plug Power

Can any of the company-specific risk be diversified away by investing in both Electrovaya Common and Plug 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 Electrovaya Common and Plug Power into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Electrovaya Common Shares and Plug Power, you can compare the effects of market volatilities on Electrovaya Common and Plug 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 Electrovaya Common with a short position of Plug Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electrovaya Common and Plug Power.

Diversification Opportunities for Electrovaya Common and Plug Power

0.29

Correlation Coefficient

Electrovaya Common  Plug Power

Modest diversification

The 3 months correlation between Electrovaya and Plug is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Electrovaya Common Shares and Plug Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plug Power and Electrovaya Common 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 Electrovaya Common Shares are associated (or correlated) with Plug Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plug Power has no effect on the direction of Electrovaya Common i.e., Electrovaya Common and Plug Power go up and down completely randomly.

Pair Corralation between Electrovaya Common and Plug Power

Given the investment horizon of 90 days Electrovaya Common Shares is expected to generate 0.61 times more return on investment than Plug Power. However, Electrovaya Common Shares is 1.63 times less risky than Plug Power. It trades about 0.13 of its potential returns per unit of risk. Plug Power is currently generating about 0.08 per unit of risk. If you would invest  197.00  in Electrovaya Common Shares on August 31, 2024 and sell it today you would earn a total of  63.00  from holding Electrovaya Common Shares or generate 31.98% return on investment over 90 days.

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

Electrovaya Common Shares  vs.  Plug Power

Electrovaya Common Shares

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Electrovaya Common Shares are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, Electrovaya Common sustained solid returns over the last few months and may actually be approaching a breakup point.

Plug Power

Risk-Adjusted Performance

6 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Plug Power are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Plug Power reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Electrovaya Common and Plug Power

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

The idea behind Electrovaya Common Shares and Plug 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.