Correlation Between Fusion Fuel and Orsted A/S

Can any of the company-specific risk be diversified away by investing in both Fusion Fuel and Orsted A/S 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 Orsted A/S 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 Orsted AS, you can compare the effects of market volatilities on Fusion Fuel and Orsted A/S 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 Orsted A/S. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fusion Fuel and Orsted A/S.

Diversification Opportunities for Fusion Fuel and Orsted A/S

-0.15

Correlation Coefficient

Fusion Fuel  Orsted A/S

Good diversification

The 3 months correlation between Fusion and Orsted is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Fusion Fuel Green and Orsted AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orsted A/S 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 Orsted A/S. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orsted A/S has no effect on the direction of Fusion Fuel i.e., Fusion Fuel and Orsted A/S go up and down completely randomly.

Pair Corralation between Fusion Fuel and Orsted A/S

Assuming the 90 days horizon Fusion Fuel is expected to generate 2.6 times less return on investment than Orsted A/S. In addition to that, Fusion Fuel is 4.1 times more volatile than Orsted AS. It trades about 0.0 of its total potential returns per unit of risk. Orsted AS is currently generating about 0.02 per unit of volatility. If you would invest  4,526  in Orsted AS on December 29, 2024 and sell it today you would lose (41.00) from holding Orsted AS or give up 0.91% of portfolio value over 90 days.

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

Fusion Fuel Green  vs.  Orsted AS

Fusion Fuel Green

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fusion Fuel Green has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Fusion Fuel is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Orsted A/S

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Orsted AS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Orsted A/S is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Fusion Fuel and Orsted A/S

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

The idea behind Fusion Fuel Green and Orsted AS 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 Stocks Directory module to find actively traded stocks across global markets.