Correlation Between Fuse Science and Cerberus Cyber

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

By analyzing existing cross correlation between Fuse Science and Cerberus Cyber Sentinel, you can compare the effects of market volatilities on Fuse Science and Cerberus Cyber 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 Fuse Science with a short position of Cerberus Cyber. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fuse Science and Cerberus Cyber.

Diversification Opportunities for Fuse Science and Cerberus Cyber

0.39

Correlation Coefficient

Fuse Science  Cerberus Cyber

Weak diversification

The 3 months correlation between Fuse and Cerberus is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Fuse Science and Cerberus Cyber Sentinel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cerberus Cyber Sentinel and Fuse Science 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 Fuse Science are associated (or correlated) with Cerberus Cyber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cerberus Cyber Sentinel has no effect on the direction of Fuse Science i.e., Fuse Science and Cerberus Cyber go up and down completely randomly.

Pair Corralation between Fuse Science and Cerberus Cyber

Given the investment horizon of 90 days Fuse Science is expected to generate 2.8 times more return on investment than Cerberus Cyber. However, Fuse Science is 2.8 times more volatile than Cerberus Cyber Sentinel. It trades about 0.1 of its potential returns per unit of risk. Cerberus Cyber Sentinel is currently generating about 0.23 per unit of risk. If you would invest  0.49  in Fuse Science on September 17, 2024 and sell it today you would earn a total of  0.01  from holding Fuse Science or generate 2.04% return on investment over 90 days.

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

Fuse Science  vs.  Cerberus Cyber Sentinel

Fuse Science

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fuse Science are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Fuse Science reported solid returns over the last few months and may actually be approaching a breakup point.

Cerberus Cyber Sentinel

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cerberus Cyber Sentinel are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Cerberus Cyber displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fuse Science and Cerberus Cyber

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

The idea behind Fuse Science and Cerberus Cyber Sentinel 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.