Correlation Between FLSmidth and Green Hydrogen
Can any of the company-specific risk be diversified away by investing in both FLSmidth and Green 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 FLSmidth and Green Hydrogen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FLSmidth Co and Green Hydrogen Systems, you can compare the effects of market volatilities on FLSmidth and Green 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 FLSmidth with a short position of Green Hydrogen. Check out your portfolio center. Please also check ongoing floating volatility patterns of FLSmidth and Green Hydrogen.
Diversification Opportunities for FLSmidth and Green Hydrogen
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between FLSmidth and Green is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding FLSmidth Co and Green Hydrogen Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green Hydrogen Systems and FLSmidth 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 FLSmidth Co are associated (or correlated) with Green Hydrogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green Hydrogen Systems has no effect on the direction of FLSmidth i.e., FLSmidth and Green Hydrogen go up and down completely randomly.
Pair Corralation between FLSmidth and Green Hydrogen
Assuming the 90 days trading horizon FLSmidth is expected to generate 26.46 times less return on investment than Green Hydrogen. But when comparing it to its historical volatility, FLSmidth Co is 5.65 times less risky than Green Hydrogen. It trades about 0.04 of its potential returns per unit of risk. Green Hydrogen Systems is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 220.00 in Green Hydrogen Systems on August 29, 2024 and sell it today you would earn a total of 62.00 from holding Green Hydrogen Systems or generate 28.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FLSmidth Co vs. Green Hydrogen Systems
Performance |
| Timeline |
| FLSmidth |
| Green Hydrogen Systems |
FLSmidth and Green Hydrogen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FLSmidth and Green Hydrogen
The main advantage of trading using opposite FLSmidth and Green Hydrogen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FLSmidth position performs unexpectedly, Green 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 Green Hydrogen will offset losses from the drop in Green Hydrogen's long position.The idea behind FLSmidth Co and Green Hydrogen Systems 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.| Green Hydrogen vs. Ambu AS | Green Hydrogen vs. GN Store Nord | Green Hydrogen vs. Bavarian Nordic | Green Hydrogen vs. FLSmidth Co |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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