Correlation Between American Security and Fusion Fuel

Can any of the company-specific risk be diversified away by investing in both American Security 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 American Security and Fusion Fuel 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 Fusion Fuel Green, you can compare the effects of market volatilities on American Security 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 American Security with a short position of Fusion Fuel. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Security and Fusion Fuel.

Diversification Opportunities for American Security and Fusion Fuel

0.13

Correlation Coefficient

American Security  Fusion Fuel

Average diversification

The 3 months correlation between American and Fusion is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding American Security Resources 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 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 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 American Security i.e., American Security and Fusion Fuel go up and down completely randomly.

Pair Corralation between American Security and Fusion Fuel

Given the investment horizon of 90 days American Security Resources is expected to generate 0.69 times more return on investment than Fusion Fuel. However, American Security Resources is 1.44 times less risky than Fusion Fuel. It trades about 0.03 of its potential returns per unit of risk. Fusion Fuel Green is currently generating about 0.01 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 Together
Strength	Insignificant
Accuracy	99.2%
Values	Daily Returns

American Security Resources  vs.  Fusion Fuel Green

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.

Fusion Fuel Green

Risk-Adjusted Performance

6 of 100

Modest

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

Pair Trading with American Security and Fusion Fuel

The main advantage of trading using opposite American Security and Fusion Fuel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Security 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 American Security Resources 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.