Correlation Between GLG LIFE and FuelCell Energy

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

By analyzing existing cross correlation between GLG LIFE TECH and FuelCell Energy, you can compare the effects of market volatilities on GLG LIFE and FuelCell Energy 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 GLG LIFE with a short position of FuelCell Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of GLG LIFE and FuelCell Energy.

Diversification Opportunities for GLG LIFE and FuelCell Energy

0.0

Correlation Coefficient

GLG LIFE  FuelCell Energy

Pay attention - limited upside

The 3 months correlation between GLG and FuelCell is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding GLG LIFE TECH and FuelCell Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FuelCell Energy and GLG LIFE 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 GLG LIFE TECH are associated (or correlated) with FuelCell Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FuelCell Energy has no effect on the direction of GLG LIFE i.e., GLG LIFE and FuelCell Energy go up and down completely randomly.

Pair Corralation between GLG LIFE and FuelCell Energy

If you would invest  1,175  in FuelCell Energy on September 22, 2024 and sell it today you would lose (245.00) from holding FuelCell Energy or give up 20.85% of portfolio value over 90 days.

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

GLG LIFE TECH  vs.  FuelCell Energy

GLG LIFE TECH

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GLG LIFE TECH has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, GLG LIFE is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

FuelCell Energy

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days FuelCell Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, FuelCell Energy is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with GLG LIFE and FuelCell Energy

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

The idea behind GLG LIFE TECH and FuelCell Energy 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.