Correlation Between Energous and Coherent

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

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

Diversification Opportunities for Energous and Coherent

-0.09

Correlation Coefficient

Energous  Coherent

Good diversification

The 3 months correlation between Energous and Coherent is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Energous and Coherent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coherent and Energous 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 Energous are associated (or correlated) with Coherent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coherent has no effect on the direction of Energous i.e., Energous and Coherent go up and down completely randomly.

Pair Corralation between Energous and Coherent

Given the investment horizon of 90 days Energous is expected to generate 16.42 times more return on investment than Coherent. However, Energous is 16.42 times more volatile than Coherent. It trades about 0.09 of its potential returns per unit of risk. Coherent is currently generating about -0.05 per unit of risk. If you would invest  49.00  in Energous on November 19, 2024 and sell it today you would lose (4.80) from holding Energous or give up 9.8% of portfolio value over 90 days.

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

Energous  vs.  Coherent

Energous

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Energous are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Energous unveiled solid returns over the last few months and may actually be approaching a breakup point.

Coherent

Risk-Adjusted Performance

Very Weak

Over the last 90 days Coherent has generated negative risk-adjusted returns adding no value to investors with long positions. Even with inconsistent performance in the last few months, the Stock's technical indicators remain relatively invariable which may send shares a bit higher in March 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Energous and Coherent

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

The idea behind Energous and Coherent 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.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.