Correlation Between FuelPositive Corp and Advanced Energy

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

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

Diversification Opportunities for FuelPositive Corp and Advanced Energy

-0.52

Correlation Coefficient

FuelPositive Corp  Advanced Energy

Excellent diversification

The 3 months correlation between FuelPositive and Advanced is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding FuelPositive Corp and Advanced Energy Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Energy Indu and FuelPositive Corp 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 FuelPositive Corp are associated (or correlated) with Advanced Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Energy Indu has no effect on the direction of FuelPositive Corp i.e., FuelPositive Corp and Advanced Energy go up and down completely randomly.

Pair Corralation between FuelPositive Corp and Advanced Energy

Assuming the 90 days horizon FuelPositive Corp is expected to generate 8.02 times more return on investment than Advanced Energy. However, FuelPositive Corp is 8.02 times more volatile than Advanced Energy Industries. It trades about 0.07 of its potential returns per unit of risk. Advanced Energy Industries is currently generating about 0.14 per unit of risk. If you would invest  3.00  in FuelPositive Corp on September 3, 2024 and sell it today you would earn a total of  0.00  from holding FuelPositive Corp or generate 0.0% return on investment over 90 days.

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

FuelPositive Corp  vs.  Advanced Energy Industries

FuelPositive Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in FuelPositive Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical indicators, FuelPositive Corp reported solid returns over the last few months and may actually be approaching a breakup point.

Advanced Energy Indu

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Advanced Energy Industries are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent forward indicators, Advanced Energy unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FuelPositive Corp and Advanced Energy

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

The idea behind FuelPositive Corp and Advanced Energy Industries 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.