Correlation Between Energem Corp and Plug Power

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

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

Diversification Opportunities for Energem Corp and Plug Power

-0.37

Correlation Coefficient

Energem Corp  Plug Power

Very good diversification

The 3 months correlation between Energem and Plug is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Energem Corp Warrant and Plug Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plug Power and Energem Corp 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 Energem Corp Warrant 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 Energem Corp i.e., Energem Corp and Plug Power go up and down completely randomly.

Pair Corralation between Energem Corp and Plug Power

If you would invest (100.00) in Energem Corp Warrant on February 3, 2024 and sell it today you would earn a total of  100.00  from holding Energem Corp Warrant or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Energem Corp Warrant  vs.  Plug Power

Energem Corp Warrant

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Energem Corp Warrant has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in June 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

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 June 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Energem Corp and Plug Power

The main advantage of trading using opposite Energem Corp and Plug Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energem Corp 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 Energem Corp Warrant 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.