Correlation Between Volcon and First Hydrogen

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

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

Diversification Opportunities for Volcon and First Hydrogen

-0.42

Correlation Coefficient

Volcon  First Hydrogen

Very good diversification

The 3 months correlation between Volcon and First is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Volcon Inc and First Hydrogen Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Hydrogen Corp and Volcon 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 Volcon Inc are associated (or correlated) with First Hydrogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Hydrogen Corp has no effect on the direction of Volcon i.e., Volcon and First Hydrogen go up and down completely randomly.

Pair Corralation between Volcon and First Hydrogen

Given the investment horizon of 90 days Volcon Inc is expected to under-perform the First Hydrogen. But the stock apears to be less risky and, when comparing its historical volatility, Volcon Inc is 1.15 times less risky than First Hydrogen. The stock trades about -0.27 of its potential returns per unit of risk. The First Hydrogen Corp is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  24.00  in First Hydrogen Corp on December 28, 2024 and sell it today you would earn a total of  16.00  from holding First Hydrogen Corp or generate 66.67% return on investment over 90 days.

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

Volcon Inc  vs.  First Hydrogen Corp

Volcon Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Volcon Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

First Hydrogen Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in First Hydrogen Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, First Hydrogen reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Volcon and First Hydrogen

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

The idea behind Volcon Inc and First Hydrogen Corp 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.