Correlation Between Plug Power and Electrovaya Common

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

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

Diversification Opportunities for Plug Power and Electrovaya Common

0.36

Correlation Coefficient

Plug Power  Electrovaya Common

Weak diversification

The 3 months correlation between Plug and Electrovaya is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Plug Power and Electrovaya Common Shares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electrovaya Common Shares and Plug 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 Plug Power are associated (or correlated) with Electrovaya Common. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electrovaya Common Shares has no effect on the direction of Plug Power i.e., Plug Power and Electrovaya Common go up and down completely randomly.

Pair Corralation between Plug Power and Electrovaya Common

Given the investment horizon of 90 days Plug Power is expected to generate 1.62 times more return on investment than Electrovaya Common. However, Plug Power is 1.62 times more volatile than Electrovaya Common Shares. It trades about 0.1 of its potential returns per unit of risk. Electrovaya Common Shares is currently generating about 0.16 per unit of risk. If you would invest  174.00  in Plug Power on September 4, 2024 and sell it today you would earn a total of  56.00  from holding Plug Power or generate 32.18% return on investment over 90 days.

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

Plug Power  vs.  Electrovaya Common Shares

Plug Power

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Plug Power are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Plug Power reported solid returns over the last few months and may actually be approaching a breakup point.

Electrovaya Common Shares

Risk-Adjusted Performance

12 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Electrovaya Common Shares are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Electrovaya Common sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Plug Power and Electrovaya Common

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

The idea behind Plug Power and Electrovaya Common Shares 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.