Correlation Between Ballard Power and Plug Power

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

Diversification Opportunities for Ballard Power and Plug Power

-0.01

Correlation Coefficient

Ballard Power  Plug Power

Good diversification

The 3 months correlation between Ballard and Plug is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Ballard Power Systems and Plug Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plug Power 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 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 Ballard Power i.e., Ballard Power and Plug Power go up and down completely randomly.

Pair Corralation between Ballard Power and Plug Power

Assuming the 90 days horizon Ballard Power Systems is expected to generate 0.66 times more return on investment than Plug Power. However, Ballard Power Systems is 1.52 times less risky than Plug Power. It trades about -0.05 of its potential returns per unit of risk. Plug Power is currently generating about -0.03 per unit of risk. If you would invest  532.00  in Ballard Power Systems on September 2, 2024 and sell it today you would lose (391.00) from holding Ballard Power Systems or give up 73.5% of portfolio value over 90 days.

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

Ballard Power Systems  vs.  Plug Power

Ballard Power Systems

Risk-Adjusted Performance

0 of 100

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 latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Plug Power

Risk-Adjusted Performance

6 of 100

Modest

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 fragile basic indicators, Plug Power reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ballard Power and Plug Power

The main advantage of trading using opposite Ballard Power and Plug Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ballard Power 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 Ballard Power Systems 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.