Correlation Between Altus Power and Fusion Fuel

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

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

Diversification Opportunities for Altus Power and Fusion Fuel

-0.66

Correlation Coefficient

Altus Power  Fusion Fuel

Excellent diversification

The 3 months correlation between Altus and Fusion is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Altus Power and Fusion Fuel Green in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fusion Fuel Green and Altus Power 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 Altus Power are associated (or correlated) with Fusion Fuel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fusion Fuel Green has no effect on the direction of Altus Power i.e., Altus Power and Fusion Fuel go up and down completely randomly.

Pair Corralation between Altus Power and Fusion Fuel

Given the investment horizon of 90 days Altus Power is expected to generate 0.25 times more return on investment than Fusion Fuel. However, Altus Power is 4.0 times less risky than Fusion Fuel. It trades about 0.09 of its potential returns per unit of risk. Fusion Fuel Green is currently generating about 0.0 per unit of risk. If you would invest  414.00  in Altus Power on December 29, 2024 and sell it today you would earn a total of  80.00  from holding Altus Power or generate 19.32% return on investment over 90 days.

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

Altus Power  vs.  Fusion Fuel Green

Altus Power

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Altus Power are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Altus Power unveiled solid returns over the last few months and may actually be approaching a breakup point.

Fusion Fuel Green

Risk-Adjusted Performance

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 fairly stable basic indicators, Fusion Fuel is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Altus Power and Fusion Fuel

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

The idea behind Altus Power and Fusion Fuel Green 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.