Correlation Between Global Blue and Fuse Science

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

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

Diversification Opportunities for Global Blue and Fuse Science

0.24

Correlation Coefficient

Global Blue  Fuse Science

Modest diversification

The 3 months correlation between Global and Fuse is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Global Blue Group and Fuse Science in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fuse Science and Global Blue 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 Global Blue Group are associated (or correlated) with Fuse Science. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fuse Science has no effect on the direction of Global Blue i.e., Global Blue and Fuse Science go up and down completely randomly.

Pair Corralation between Global Blue and Fuse Science

Allowing for the 90-day total investment horizon Global Blue is expected to generate 18.73 times less return on investment than Fuse Science. But when comparing it to its historical volatility, Global Blue Group is 8.19 times less risky than Fuse Science. It trades about 0.04 of its potential returns per unit of risk. Fuse Science is currently generating about 0.1 of returns per unit of risk over similar time horizon. 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	100.0%
Values	Daily Returns

Global Blue Group  vs.  Fuse Science

Global Blue Group

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Global Blue Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady fundamental drivers, Global Blue may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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.

Pair Trading with Global Blue and Fuse Science

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

The idea behind Global Blue Group and Fuse Science 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.