Correlation Between Artisan Consumer and Plug Power

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

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

Diversification Opportunities for Artisan Consumer and Plug Power

-0.03

Correlation Coefficient

Artisan Consumer  Plug Power

Good diversification

The 3 months correlation between Artisan and Plug is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Artisan Consumer Goods and Plug Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plug Power and Artisan Consumer 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 Artisan Consumer Goods are associated (or correlated) with Plug Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plug Power has no effect on the direction of Artisan Consumer i.e., Artisan Consumer and Plug Power go up and down completely randomly.

Pair Corralation between Artisan Consumer and Plug Power

Given the investment horizon of 90 days Artisan Consumer Goods is expected to under-perform the Plug Power. In addition to that, Artisan Consumer is 1.33 times more volatile than Plug Power. It trades about -0.28 of its total potential returns per unit of risk. Plug Power is currently generating about 0.12 per unit of volatility. If you would invest  256.00  in Plug Power on March 11, 2024 and sell it today you would earn a total of  34.00  from holding Plug Power or generate 13.28% return on investment over 90 days.

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

Artisan Consumer Goods  vs.  Plug Power

Artisan Consumer Goods

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Artisan Consumer Goods are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Artisan Consumer unveiled solid returns over the last few months and may actually be approaching a breakup point.

Plug Power

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Plug Power has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in July 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Artisan Consumer and Plug Power

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

The idea behind Artisan Consumer Goods and Plug Power 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.