Correlation Between Eos Energy and Chardan NexTech

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

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

Diversification Opportunities for Eos Energy and Chardan NexTech

0.38

Correlation Coefficient

Eos Energy  Chardan NexTech

Weak diversification

The 3 months correlation between Eos and Chardan is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Eos Energy Enterprises and Chardan NexTech Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chardan NexTech Acqu and Eos 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 Eos Energy Enterprises are associated (or correlated) with Chardan NexTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chardan NexTech Acqu has no effect on the direction of Eos Energy i.e., Eos Energy and Chardan NexTech go up and down completely randomly.

Pair Corralation between Eos Energy and Chardan NexTech

Given the investment horizon of 90 days Eos Energy Enterprises is expected to generate 0.89 times more return on investment than Chardan NexTech. However, Eos Energy Enterprises is 1.12 times less risky than Chardan NexTech. It trades about 0.05 of its potential returns per unit of risk. Chardan NexTech Acquisition is currently generating about -0.06 per unit of risk. If you would invest  246.00  in Eos Energy Enterprises on August 31, 2024 and sell it today you would earn a total of  24.00  from holding Eos Energy Enterprises or generate 9.76% return on investment over 90 days.

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

Eos Energy Enterprises  vs.  Chardan NexTech Acquisition

Eos Energy Enterprises

Risk-Adjusted Performance

4 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eos Energy Enterprises are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Eos Energy exhibited solid returns over the last few months and may actually be approaching a breakup point.

Chardan NexTech Acqu

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chardan NexTech Acquisition 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 essential indicators remain fairly strong which may send shares a bit higher in December 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Eos Energy and Chardan NexTech

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

The idea behind Eos Energy Enterprises and Chardan NexTech Acquisition 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.