Correlation Between Fusion Fuel and Astra Energy

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

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

Diversification Opportunities for Fusion Fuel and Astra Energy

0.34

Correlation Coefficient

Fusion Fuel  Astra Energy

Weak diversification

The 3 months correlation between Fusion and Astra is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Fusion Fuel Green and Astra Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astra Energy and Fusion Fuel 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 Fusion Fuel Green are associated (or correlated) with Astra Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astra Energy has no effect on the direction of Fusion Fuel i.e., Fusion Fuel and Astra Energy go up and down completely randomly.

Pair Corralation between Fusion Fuel and Astra Energy

Given the investment horizon of 90 days Fusion Fuel Green is expected to generate 1.28 times more return on investment than Astra Energy. However, Fusion Fuel is 1.28 times more volatile than Astra Energy. It trades about 0.01 of its potential returns per unit of risk. Astra Energy is currently generating about -0.02 per unit of risk. If you would invest  115.00  in Fusion Fuel Green on October 2, 2024 and sell it today you would lose (59.00) from holding Fusion Fuel Green or give up 51.3% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.6%
Values	Daily Returns

Fusion Fuel Green  vs.  Astra Energy

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.

Astra Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Astra Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak 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 Fusion Fuel and Astra Energy

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

The idea behind Fusion Fuel Green and Astra 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.

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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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.