Correlation Between FuelPositive Corp and Exro Technologies

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

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

Diversification Opportunities for FuelPositive Corp and Exro Technologies

0.42

Correlation Coefficient

FuelPositive Corp  Exro Technologies

Very weak diversification

The 3 months correlation between FuelPositive and Exro is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding FuelPositive Corp and Exro Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exro Technologies and FuelPositive Corp 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 FuelPositive Corp are associated (or correlated) with Exro Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exro Technologies has no effect on the direction of FuelPositive Corp i.e., FuelPositive Corp and Exro Technologies go up and down completely randomly.

Pair Corralation between FuelPositive Corp and Exro Technologies

Assuming the 90 days horizon FuelPositive Corp is expected to generate 1.57 times more return on investment than Exro Technologies. However, FuelPositive Corp is 1.57 times more volatile than Exro Technologies. It trades about 0.03 of its potential returns per unit of risk. Exro Technologies is currently generating about -0.07 per unit of risk. If you would invest  3.00  in FuelPositive Corp on September 23, 2024 and sell it today you would lose (1.00) from holding FuelPositive Corp or give up 33.33% of portfolio value over 90 days.

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

FuelPositive Corp  vs.  Exro Technologies

FuelPositive Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in FuelPositive Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical indicators, FuelPositive Corp reported solid returns over the last few months and may actually be approaching a breakup point.

Exro Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Exro Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with FuelPositive Corp and Exro Technologies

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

The idea behind FuelPositive Corp and Exro Technologies 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.