Correlation Between Ballard Power and Otis Worldwide

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

By analyzing existing cross correlation between Ballard Power Systems and Otis Worldwide Corp, you can compare the effects of market volatilities on Ballard Power and Otis Worldwide 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 Ballard Power with a short position of Otis Worldwide. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ballard Power and Otis Worldwide.

Diversification Opportunities for Ballard Power and Otis Worldwide

-0.75

Correlation Coefficient

Ballard Power  Otis Worldwide

Pay attention - limited upside

The 3 months correlation between Ballard and Otis is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Ballard Power Systems and Otis Worldwide Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Otis Worldwide Corp and Ballard 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 Ballard Power Systems are associated (or correlated) with Otis Worldwide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Otis Worldwide Corp has no effect on the direction of Ballard Power i.e., Ballard Power and Otis Worldwide go up and down completely randomly.

Pair Corralation between Ballard Power and Otis Worldwide

Assuming the 90 days horizon Ballard Power Systems is expected to under-perform the Otis Worldwide. In addition to that, Ballard Power is 3.6 times more volatile than Otis Worldwide Corp. It trades about -0.1 of its total potential returns per unit of risk. Otis Worldwide Corp is currently generating about 0.09 per unit of volatility. If you would invest  8,884  in Otis Worldwide Corp on December 29, 2024 and sell it today you would earn a total of  594.00  from holding Otis Worldwide Corp or generate 6.69% return on investment over 90 days.

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

Ballard Power Systems  vs.  Otis Worldwide Corp

Ballard Power Systems

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ballard Power Systems has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Otis Worldwide Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Otis Worldwide Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Otis Worldwide may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Ballard Power and Otis Worldwide

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

The idea behind Ballard Power Systems and Otis Worldwide Corp 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.