Correlation Between Bloom Energy and OSRAM LICHT

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

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

Diversification Opportunities for Bloom Energy and OSRAM LICHT

0.86

Correlation Coefficient

Bloom Energy  OSRAM LICHT

Very poor diversification

The 3 months correlation between Bloom and OSRAM is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Bloom Energy and OSRAM LICHT N in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OSRAM LICHT N and Bloom Energy 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 Bloom Energy are associated (or correlated) with OSRAM LICHT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OSRAM LICHT N has no effect on the direction of Bloom Energy i.e., Bloom Energy and OSRAM LICHT go up and down completely randomly.

Pair Corralation between Bloom Energy and OSRAM LICHT

Assuming the 90 days horizon Bloom Energy is expected to generate 49.03 times more return on investment than OSRAM LICHT. However, Bloom Energy is 49.03 times more volatile than OSRAM LICHT N. It trades about 0.15 of its potential returns per unit of risk. OSRAM LICHT N is currently generating about 0.22 per unit of risk. If you would invest  992.00  in Bloom Energy on September 23, 2024 and sell it today you would earn a total of  1,250  from holding Bloom Energy or generate 126.01% return on investment over 90 days.

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

Bloom Energy  vs.  OSRAM LICHT N

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.

OSRAM LICHT N

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in OSRAM LICHT N are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, OSRAM LICHT is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Bloom Energy and OSRAM LICHT

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

The idea behind Bloom Energy and OSRAM LICHT N 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.