Correlation Between Alfen NV and FuelPositive Corp

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

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

Diversification Opportunities for Alfen NV and FuelPositive Corp

0.27

Correlation Coefficient

Alfen NV  FuelPositive Corp

Modest diversification

The 3 months correlation between Alfen and FuelPositive is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Alfen NV and FuelPositive Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FuelPositive Corp and Alfen NV 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 Alfen NV are associated (or correlated) with FuelPositive Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FuelPositive Corp has no effect on the direction of Alfen NV i.e., Alfen NV and FuelPositive Corp go up and down completely randomly.

Pair Corralation between Alfen NV and FuelPositive Corp

Assuming the 90 days horizon Alfen NV is expected to under-perform the FuelPositive Corp. But the otc stock apears to be less risky and, when comparing its historical volatility, Alfen NV is 5.5 times less risky than FuelPositive Corp. The otc stock trades about -0.18 of its potential returns per unit of risk. The FuelPositive Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  3.00  in FuelPositive Corp on September 3, 2024 and sell it today you would earn a total of  0.00  from holding FuelPositive Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Alfen NV  vs.  FuelPositive Corp

Alfen NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alfen NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's fundamental drivers remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

FuelPositive Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in FuelPositive Corp are ranked lower than 5 (%) 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.

Pair Trading with Alfen NV and FuelPositive Corp

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

The idea behind Alfen NV and FuelPositive 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.

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 Transaction History module to view history of all your transactions and understand their impact on performance.