Correlation Between FuelCell Energy and Gerresheimer
Can any of the company-specific risk be diversified away by investing in both FuelCell Energy and Gerresheimer 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 FuelCell Energy and Gerresheimer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FuelCell Energy and Gerresheimer AG, you can compare the effects of market volatilities on FuelCell Energy and Gerresheimer 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 FuelCell Energy with a short position of Gerresheimer. Check out your portfolio center. Please also check ongoing floating volatility patterns of FuelCell Energy and Gerresheimer.
Diversification Opportunities for FuelCell Energy and Gerresheimer
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between FuelCell and Gerresheimer is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding FuelCell Energy and Gerresheimer AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gerresheimer AG and FuelCell Energy 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 FuelCell Energy are associated (or correlated) with Gerresheimer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gerresheimer AG has no effect on the direction of FuelCell Energy i.e., FuelCell Energy and Gerresheimer go up and down completely randomly.
Pair Corralation between FuelCell Energy and Gerresheimer
Assuming the 90 days trading horizon FuelCell Energy is expected to generate 6.4 times more return on investment than Gerresheimer. However, FuelCell Energy is 6.4 times more volatile than Gerresheimer AG. It trades about 0.03 of its potential returns per unit of risk. Gerresheimer AG is currently generating about -0.26 per unit of risk. If you would invest 1,110 in FuelCell Energy on August 28, 2024 and sell it today you would lose (64.00) from holding FuelCell Energy or give up 5.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FuelCell Energy vs. Gerresheimer AG
Performance |
| Timeline |
| FuelCell Energy |
| Gerresheimer AG |
FuelCell Energy and Gerresheimer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FuelCell Energy and Gerresheimer
The main advantage of trading using opposite FuelCell Energy and Gerresheimer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FuelCell Energy position performs unexpectedly, Gerresheimer 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 Gerresheimer will offset losses from the drop in Gerresheimer's long position.| FuelCell Energy vs. Zegona Communications Plc | FuelCell Energy vs. Aeorema Communications Plc | FuelCell Energy vs. PureTech Health plc | FuelCell Energy vs. Vitec Software Group |
| Gerresheimer vs. Sealed Air Corp | Gerresheimer vs. Ryanair Holdings plc | Gerresheimer vs. National Beverage Corp | Gerresheimer vs. Alaska Air Group |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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