Correlation Between Plug Power and Nemetschek
Can any of the company-specific risk be diversified away by investing in both Plug Power and Nemetschek 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 Plug Power and Nemetschek into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Plug Power and Nemetschek SE, you can compare the effects of market volatilities on Plug Power and Nemetschek 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 Plug Power with a short position of Nemetschek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Plug Power and Nemetschek.
Diversification Opportunities for Plug Power and Nemetschek
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Plug and Nemetschek is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Plug Power and Nemetschek SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nemetschek SE and Plug Power 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 Plug Power are associated (or correlated) with Nemetschek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nemetschek SE has no effect on the direction of Plug Power i.e., Plug Power and Nemetschek go up and down completely randomly.
Pair Corralation between Plug Power and Nemetschek
Given the investment horizon of 90 days Plug Power is expected to under-perform the Nemetschek. In addition to that, Plug Power is 1.14 times more volatile than Nemetschek SE. It trades about -0.08 of its total potential returns per unit of risk. Nemetschek SE is currently generating about 0.07 per unit of volatility. If you would invest 2,332 in Nemetschek SE on December 13, 2024 and sell it today you would earn a total of 358.00 from holding Nemetschek SE or generate 15.35% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 98.33% |
Values | Daily Returns |
Plug Power vs. Nemetschek SE
Performance |
Timeline |
Plug Power |
Nemetschek SE |
Plug Power and Nemetschek Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Plug Power and Nemetschek
The main advantage of trading using opposite Plug Power and Nemetschek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Plug Power position performs unexpectedly, Nemetschek 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 Nemetschek will offset losses from the drop in Nemetschek's long position.Plug Power vs. Bloom Energy Corp | ||
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Check out your portfolio center.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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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