Correlation Between Fusion Fuel and Altus Power

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

Diversification Opportunities for Fusion Fuel and Altus Power

-0.7

Correlation Coefficient

Fusion Fuel  Altus Power

Excellent diversification

The 3 months correlation between Fusion and Altus is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Fusion Fuel Green and Altus Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altus Power 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 Altus Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altus Power has no effect on the direction of Fusion Fuel i.e., Fusion Fuel and Altus Power go up and down completely randomly.

Pair Corralation between Fusion Fuel and Altus Power

Assuming the 90 days horizon Fusion Fuel Green is expected to generate 3.19 times more return on investment than Altus Power. However, Fusion Fuel is 3.19 times more volatile than Altus Power. It trades about 0.05 of its potential returns per unit of risk. Altus Power is currently generating about 0.09 per unit of risk. If you would invest  4.10  in Fusion Fuel Green on September 5, 2024 and sell it today you would lose (2.17) from holding Fusion Fuel Green or give up 52.93% of portfolio value over 90 days.

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

Fusion Fuel Green  vs.  Altus Power

Fusion Fuel Green

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fusion Fuel Green are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Fusion Fuel showed solid returns over the last few months and may actually be approaching a breakup point.

Altus Power

Risk-Adjusted Performance

6 of 100

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 weak basic indicators, Altus Power unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fusion Fuel and Altus Power

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

The idea behind Fusion Fuel Green and Altus Power 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.