Correlation Between Astra Energy and Fusion Fuel

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

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

Diversification Opportunities for Astra Energy and Fusion Fuel

0.59

Correlation Coefficient

Astra Energy  Fusion Fuel

Very weak diversification

The 3 months correlation between Astra and Fusion is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Astra Energy and Fusion Fuel Green in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fusion Fuel Green and Astra Energy 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 Astra Energy are associated (or correlated) with Fusion Fuel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fusion Fuel Green has no effect on the direction of Astra Energy i.e., Astra Energy and Fusion Fuel go up and down completely randomly.

Pair Corralation between Astra Energy and Fusion Fuel

Given the investment horizon of 90 days Astra Energy is expected to generate 9.59 times less return on investment than Fusion Fuel. But when comparing it to its historical volatility, Astra Energy is 3.26 times less risky than Fusion Fuel. It trades about 0.01 of its potential returns per unit of risk. Fusion Fuel Green is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  4.10  in Fusion Fuel Green on September 3, 2024 and sell it today you would lose (2.60) from holding Fusion Fuel Green or give up 63.41% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Astra Energy  vs.  Fusion Fuel Green

Astra Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Astra Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Astra Energy is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Fusion Fuel Green

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fusion Fuel Green are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Fusion Fuel showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Astra Energy and Fusion Fuel

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

The idea behind Astra Energy and Fusion Fuel Green 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.