Correlation Between FuelCell Energy and Elong Power

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

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

Diversification Opportunities for FuelCell Energy and Elong Power

0.15

Correlation Coefficient

FuelCell Energy  Elong Power

Average diversification

The 3 months correlation between FuelCell and Elong is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding FuelCell Energy and Elong Power Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elong Power Holding and FuelCell Energy 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 FuelCell Energy are associated (or correlated) with Elong Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elong Power Holding has no effect on the direction of FuelCell Energy i.e., FuelCell Energy and Elong Power go up and down completely randomly.

Pair Corralation between FuelCell Energy and Elong Power

Given the investment horizon of 90 days FuelCell Energy is expected to generate 0.6 times more return on investment than Elong Power. However, FuelCell Energy is 1.68 times less risky than Elong Power. It trades about 0.35 of its potential returns per unit of risk. Elong Power Holding is currently generating about -0.37 per unit of risk. If you would invest  616.00  in FuelCell Energy on September 16, 2024 and sell it today you would earn a total of  523.00  from holding FuelCell Energy or generate 84.9% return on investment over 90 days.

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

FuelCell Energy  vs.  Elong Power Holding

FuelCell Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FuelCell Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, FuelCell Energy is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Elong Power Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Elong Power Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with FuelCell Energy and Elong Power

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

The idea behind FuelCell Energy and Elong Power Holding 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.