Correlation Between Fusion Fuel and Innergex Renewable

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

Diversification Opportunities for Fusion Fuel and Innergex Renewable

-0.55

Correlation Coefficient

Fusion Fuel  Innergex Renewable

Excellent diversification

The 3 months correlation between Fusion and Innergex is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Fusion Fuel Green and Innergex Renewable Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innergex Renewable 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 Innergex Renewable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innergex Renewable Energy has no effect on the direction of Fusion Fuel i.e., Fusion Fuel and Innergex Renewable go up and down completely randomly.

Pair Corralation between Fusion Fuel and Innergex Renewable

Assuming the 90 days horizon Fusion Fuel is expected to generate 37.58 times less return on investment than Innergex Renewable. In addition to that, Fusion Fuel is 2.36 times more volatile than Innergex Renewable Energy. It trades about 0.0 of its total potential returns per unit of risk. Innergex Renewable Energy is currently generating about 0.15 per unit of volatility. If you would invest  555.00  in Innergex Renewable Energy on December 30, 2024 and sell it today you would earn a total of  393.00  from holding Innergex Renewable Energy or generate 70.81% return on investment over 90 days.

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

Fusion Fuel Green  vs.  Innergex Renewable Energy

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.

Innergex Renewable Energy

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Innergex Renewable Energy are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Innergex Renewable reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fusion Fuel and Innergex Renewable

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

The idea behind Fusion Fuel Green and Innergex Renewable 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.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.