Correlation Between Delta Electronics and Bloom Energy

Can any of the company-specific risk be diversified away by investing in both Delta Electronics and Bloom Energy 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 Delta Electronics and Bloom Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Delta Electronics Public and Bloom Energy, you can compare the effects of market volatilities on Delta Electronics and Bloom Energy 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 Delta Electronics with a short position of Bloom Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Electronics and Bloom Energy.

Diversification Opportunities for Delta Electronics and Bloom Energy

0.72

Correlation Coefficient

Delta Electronics  Bloom Energy

Poor diversification

The 3 months correlation between Delta and Bloom is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Delta Electronics Public and Bloom Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bloom Energy and Delta Electronics 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 Delta Electronics Public are associated (or correlated) with Bloom Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bloom Energy has no effect on the direction of Delta Electronics i.e., Delta Electronics and Bloom Energy go up and down completely randomly.

Pair Corralation between Delta Electronics and Bloom Energy

Assuming the 90 days trading horizon Delta Electronics Public is expected to generate 0.8 times more return on investment than Bloom Energy. However, Delta Electronics Public is 1.25 times less risky than Bloom Energy. It trades about 0.16 of its potential returns per unit of risk. Bloom Energy is currently generating about -0.09 per unit of risk. If you would invest  386.00  in Delta Electronics Public on September 23, 2024 and sell it today you would earn a total of  44.00  from holding Delta Electronics Public or generate 11.4% return on investment over 90 days.

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

Delta Electronics Public  vs.  Bloom Energy

Delta Electronics Public

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Delta Electronics Public are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Delta Electronics reported solid returns over the last few months and may actually be approaching a breakup point.

Bloom Energy

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bloom Energy are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Bloom Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Delta Electronics and Bloom Energy

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

The idea behind Delta Electronics Public and Bloom Energy 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.