Correlation Between FuelCell Energy and Zegona Communications
Can any of the company-specific risk be diversified away by investing in both FuelCell Energy and Zegona Communications 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 Zegona Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FuelCell Energy and Zegona Communications Plc, you can compare the effects of market volatilities on FuelCell Energy and Zegona Communications 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 Zegona Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of FuelCell Energy and Zegona Communications.
Diversification Opportunities for FuelCell Energy and Zegona Communications
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between FuelCell and Zegona is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding FuelCell Energy and Zegona Communications Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zegona Communications Plc 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 Zegona Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zegona Communications Plc has no effect on the direction of FuelCell Energy i.e., FuelCell Energy and Zegona Communications go up and down completely randomly.
Pair Corralation between FuelCell Energy and Zegona Communications
Assuming the 90 days trading horizon FuelCell Energy is expected to generate 4.25 times more return on investment than Zegona Communications. However, FuelCell Energy is 4.25 times more volatile than Zegona Communications Plc. It trades about 0.27 of its potential returns per unit of risk. Zegona Communications Plc is currently generating about 0.12 per unit of risk. If you would invest 679.00 in FuelCell Energy on September 15, 2024 and sell it today you would earn a total of 448.00 from holding FuelCell Energy or generate 65.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FuelCell Energy vs. Zegona Communications Plc
Performance |
| Timeline |
| FuelCell Energy |
| Zegona Communications Plc |
FuelCell Energy and Zegona Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FuelCell Energy and Zegona Communications
The main advantage of trading using opposite FuelCell Energy and Zegona Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FuelCell Energy position performs unexpectedly, Zegona Communications 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 Zegona Communications will offset losses from the drop in Zegona Communications' long position.| FuelCell Energy vs. Live Nation Entertainment | FuelCell Energy vs. Hollywood Bowl Group | FuelCell Energy vs. Nordic Semiconductor ASA | FuelCell Energy vs. Bloomsbury Publishing Plc |
| Zegona Communications vs. SM Energy Co | Zegona Communications vs. FuelCell Energy | Zegona Communications vs. Grand Vision Media | Zegona Communications vs. DG Innovate PLC |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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