Correlation Between Fusion Fuel and Smart Powerr

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

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

Diversification Opportunities for Fusion Fuel and Smart Powerr

0.41

Correlation Coefficient

Fusion Fuel  Smart Powerr

Very weak diversification

The 3 months correlation between Fusion and Smart is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Fusion Fuel Green and Smart Powerr Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smart Powerr Corp and Fusion Fuel 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 Fusion Fuel Green are associated (or correlated) with Smart Powerr. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smart Powerr Corp has no effect on the direction of Fusion Fuel i.e., Fusion Fuel and Smart Powerr go up and down completely randomly.

Pair Corralation between Fusion Fuel and Smart Powerr

Given the investment horizon of 90 days Fusion Fuel Green is expected to under-perform the Smart Powerr. In addition to that, Fusion Fuel is 2.22 times more volatile than Smart Powerr Corp. It trades about -0.06 of its total potential returns per unit of risk. Smart Powerr Corp is currently generating about -0.05 per unit of volatility. If you would invest  85.00  in Smart Powerr Corp on August 31, 2024 and sell it today you would lose (17.00) from holding Smart Powerr Corp or give up 20.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Fusion Fuel Green  vs.  Smart Powerr Corp

Fusion Fuel Green

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fusion Fuel Green has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Smart Powerr Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Smart Powerr Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Fusion Fuel and Smart Powerr

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

The idea behind Fusion Fuel Green and Smart Powerr 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.