Correlation Between SunHydrogen and Newhydrogen

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

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

Diversification Opportunities for SunHydrogen and Newhydrogen

0.09

Correlation Coefficient

SunHydrogen  Newhydrogen

Significant diversification

The 3 months correlation between SunHydrogen and Newhydrogen is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding SunHydrogen and Newhydrogen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newhydrogen and SunHydrogen 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 SunHydrogen are associated (or correlated) with Newhydrogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newhydrogen has no effect on the direction of SunHydrogen i.e., SunHydrogen and Newhydrogen go up and down completely randomly.

Pair Corralation between SunHydrogen and Newhydrogen

Given the investment horizon of 90 days SunHydrogen is expected to generate 35.1 times less return on investment than Newhydrogen. But when comparing it to its historical volatility, SunHydrogen is 4.5 times less risky than Newhydrogen. It trades about 0.02 of its potential returns per unit of risk. Newhydrogen is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  0.31  in Newhydrogen on December 5, 2024 and sell it today you would earn a total of  1.18  from holding Newhydrogen or generate 380.65% return on investment over 90 days.

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

SunHydrogen  vs.  Newhydrogen

SunHydrogen

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SunHydrogen are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, SunHydrogen may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Newhydrogen

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Newhydrogen are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Newhydrogen demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SunHydrogen and Newhydrogen

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

The idea behind SunHydrogen and Newhydrogen 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.