Correlation Between HydroGraph Clean and FutureFuel Corp

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

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

Diversification Opportunities for HydroGraph Clean and FutureFuel Corp

-0.28

Correlation Coefficient

HydroGraph Clean  FutureFuel Corp

Very good diversification

The 3 months correlation between HydroGraph and FutureFuel is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding HydroGraph Clean Power and FutureFuel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FutureFuel Corp and HydroGraph Clean 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 HydroGraph Clean Power are associated (or correlated) with FutureFuel Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FutureFuel Corp has no effect on the direction of HydroGraph Clean i.e., HydroGraph Clean and FutureFuel Corp go up and down completely randomly.

Pair Corralation between HydroGraph Clean and FutureFuel Corp

Assuming the 90 days horizon HydroGraph Clean Power is expected to generate 2.36 times more return on investment than FutureFuel Corp. However, HydroGraph Clean is 2.36 times more volatile than FutureFuel Corp. It trades about 0.11 of its potential returns per unit of risk. FutureFuel Corp is currently generating about -0.01 per unit of risk. If you would invest  8.65  in HydroGraph Clean Power on September 12, 2024 and sell it today you would earn a total of  1.35  from holding HydroGraph Clean Power or generate 15.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	45.31%
Values	Daily Returns

HydroGraph Clean Power  vs.  FutureFuel Corp

HydroGraph Clean Power

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days HydroGraph Clean Power has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, HydroGraph Clean reported solid returns over the last few months and may actually be approaching a breakup point.

FutureFuel Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with HydroGraph Clean and FutureFuel Corp

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

The idea behind HydroGraph Clean Power and FutureFuel Corp 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 Valuation module to check real value of public entities based on technical and fundamental data.