Correlation Between GrafTech International and Bloom Energy

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

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

Diversification Opportunities for GrafTech International and Bloom Energy

0.56

Correlation Coefficient

GrafTech International  Bloom Energy

Very weak diversification

The 3 months correlation between GrafTech and Bloom is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding GrafTech International and Bloom Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bloom Energy Corp and GrafTech International 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 GrafTech International are associated (or correlated) with Bloom Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bloom Energy Corp has no effect on the direction of GrafTech International i.e., GrafTech International and Bloom Energy go up and down completely randomly.

Pair Corralation between GrafTech International and Bloom Energy

Considering the 90-day investment horizon GrafTech International is expected to generate 0.73 times more return on investment than Bloom Energy. However, GrafTech International is 1.37 times less risky than Bloom Energy. It trades about 0.27 of its potential returns per unit of risk. Bloom Energy Corp is currently generating about 0.18 per unit of risk. If you would invest  77.00  in GrafTech International on September 12, 2024 and sell it today you would earn a total of  123.00  from holding GrafTech International or generate 159.74% return on investment over 90 days.

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

GrafTech International  vs.  Bloom Energy Corp

GrafTech International

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in GrafTech International are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, GrafTech International reported solid returns over the last few months and may actually be approaching a breakup point.

Bloom Energy Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bloom Energy Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, Bloom Energy exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GrafTech International and Bloom Energy

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

The idea behind GrafTech International and Bloom Energy 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.

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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.