Correlation Between Solid Power and Ballard Power

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

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

Diversification Opportunities for Solid Power and Ballard Power

0.9

Correlation Coefficient

Solid Power  Ballard Power

Almost no diversification

The 3 months correlation between Solid and Ballard is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Solid Power and Ballard Power Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ballard Power Systems and Solid 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 Solid Power are associated (or correlated) with Ballard Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ballard Power Systems has no effect on the direction of Solid Power i.e., Solid Power and Ballard Power go up and down completely randomly.

Pair Corralation between Solid Power and Ballard Power

Given the investment horizon of 90 days Solid Power is expected to generate 1.44 times more return on investment than Ballard Power. However, Solid Power is 1.44 times more volatile than Ballard Power Systems. It trades about 0.36 of its potential returns per unit of risk. Ballard Power Systems is currently generating about 0.21 per unit of risk. If you would invest  114.00  in Solid Power on April 25, 2025 and sell it today you would earn a total of  317.00  from holding Solid Power or generate 278.07% return on investment over 90 days.

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

Solid Power  vs.  Ballard Power Systems

Solid Power

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Solid Power are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain fundamental indicators, Solid Power reported solid returns over the last few months and may actually be approaching a breakup point.

Ballard Power Systems

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ballard Power Systems are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental indicators, Ballard Power reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Solid Power and Ballard Power

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

The idea behind Solid Power and Ballard Power Systems 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.