Correlation Between American Security and Fluence Energy

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

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

Diversification Opportunities for American Security and Fluence Energy

-0.45

Correlation Coefficient

American Security  Fluence Energy

Very good diversification

The 3 months correlation between American and Fluence is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding American Security Resources and Fluence Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fluence Energy and American Security 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 American Security Resources are associated (or correlated) with Fluence Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fluence Energy has no effect on the direction of American Security i.e., American Security and Fluence Energy go up and down completely randomly.

Pair Corralation between American Security and Fluence Energy

Given the investment horizon of 90 days American Security Resources is expected to generate 1.54 times more return on investment than Fluence Energy. However, American Security is 1.54 times more volatile than Fluence Energy. It trades about 0.03 of its potential returns per unit of risk. Fluence Energy is currently generating about 0.0 per unit of risk. If you would invest  0.01  in American Security Resources on October 2, 2024 and sell it today you would earn a total of  0.00  from holding American Security Resources or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.2%
Values	Daily Returns

American Security Resources  vs.  Fluence Energy

American Security

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in American Security Resources are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, American Security exhibited solid returns over the last few months and may actually be approaching a breakup point.

Fluence Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fluence Energy 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 rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with American Security and Fluence Energy

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

The idea behind American Security Resources and Fluence 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.