Correlation Between Power Solutions and Chart Industries

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

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

Diversification Opportunities for Power Solutions and Chart Industries

0.71

Correlation Coefficient

Power Solutions  Chart Industries

Poor diversification

The 3 months correlation between Power and Chart is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Power Solutions International, and Chart Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chart Industries and Power Solutions 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 Power Solutions International, are associated (or correlated) with Chart Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chart Industries has no effect on the direction of Power Solutions i.e., Power Solutions and Chart Industries go up and down completely randomly.

Pair Corralation between Power Solutions and Chart Industries

Given the investment horizon of 90 days Power Solutions International, is expected to generate 1.72 times more return on investment than Chart Industries. However, Power Solutions is 1.72 times more volatile than Chart Industries. It trades about 0.26 of its potential returns per unit of risk. Chart Industries is currently generating about 0.1 per unit of risk. If you would invest  3,696  in Power Solutions International, on May 17, 2025 and sell it today you would earn a total of  4,425  from holding Power Solutions International, or generate 119.72% return on investment over 90 days.

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

Power Solutions International,  vs.  Chart Industries

Power Solutions Inte

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Power Solutions International, are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain forward indicators, Power Solutions showed solid returns over the last few months and may actually be approaching a breakup point.

Chart Industries

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Chart Industries are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent essential indicators, Chart Industries unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Power Solutions and Chart Industries

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

The idea behind Power Solutions International, and Chart Industries 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.