Correlation Between Cellnex Telecom and FuelCell Energy

Can any of the company-specific risk be diversified away by investing in both Cellnex Telecom and FuelCell Energy 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 Cellnex Telecom and FuelCell Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cellnex Telecom SA and FuelCell Energy, you can compare the effects of market volatilities on Cellnex Telecom and FuelCell Energy 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 Cellnex Telecom with a short position of FuelCell Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cellnex Telecom and FuelCell Energy.

Diversification Opportunities for Cellnex Telecom and FuelCell Energy

0.14

Correlation Coefficient

Cellnex Telecom  FuelCell Energy

Average diversification

The 3 months correlation between Cellnex and FuelCell is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Cellnex Telecom SA and FuelCell Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FuelCell Energy and Cellnex Telecom 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 Cellnex Telecom SA are associated (or correlated) with FuelCell Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FuelCell Energy has no effect on the direction of Cellnex Telecom i.e., Cellnex Telecom and FuelCell Energy go up and down completely randomly.

Pair Corralation between Cellnex Telecom and FuelCell Energy

Assuming the 90 days trading horizon Cellnex Telecom SA is expected to under-perform the FuelCell Energy. But the stock apears to be less risky and, when comparing its historical volatility, Cellnex Telecom SA is 5.82 times less risky than FuelCell Energy. The stock trades about -0.16 of its potential returns per unit of risk. The FuelCell Energy is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  977.00  in FuelCell Energy on October 10, 2024 and sell it today you would earn a total of  326.00  from holding FuelCell Energy or generate 33.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Cellnex Telecom SA  vs.  FuelCell Energy

Cellnex Telecom SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cellnex Telecom SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

FuelCell Energy

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FuelCell Energy are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, FuelCell Energy unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cellnex Telecom and FuelCell Energy

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

The idea behind Cellnex Telecom SA and FuelCell Energy 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.