Correlation Between Fuel Tech and Aker Carbon
Can any of the company-specific risk be diversified away by investing in both Fuel Tech and Aker Carbon 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 Fuel Tech and Aker Carbon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fuel Tech and Aker Carbon Capture, you can compare the effects of market volatilities on Fuel Tech and Aker Carbon 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 Fuel Tech with a short position of Aker Carbon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fuel Tech and Aker Carbon.
Diversification Opportunities for Fuel Tech and Aker Carbon
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Fuel and Aker is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Fuel Tech and Aker Carbon Capture in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aker Carbon Capture and Fuel Tech 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 Fuel Tech are associated (or correlated) with Aker Carbon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aker Carbon Capture has no effect on the direction of Fuel Tech i.e., Fuel Tech and Aker Carbon go up and down completely randomly.
Pair Corralation between Fuel Tech and Aker Carbon
Given the investment horizon of 90 days Fuel Tech is expected to under-perform the Aker Carbon. But the stock apears to be less risky and, when comparing its historical volatility, Fuel Tech is 1.82 times less risky than Aker Carbon. The stock trades about -0.01 of its potential returns per unit of risk. The Aker Carbon Capture is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 106.00 in Aker Carbon Capture on August 27, 2024 and sell it today you would lose (55.00) from holding Aker Carbon Capture or give up 51.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Fuel Tech vs. Aker Carbon Capture
Performance |
| Timeline |
| Fuel Tech |
| Aker Carbon Capture |
Fuel Tech and Aker Carbon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fuel Tech and Aker Carbon
The main advantage of trading using opposite Fuel Tech and Aker Carbon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fuel Tech position performs unexpectedly, Aker Carbon 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 Aker Carbon will offset losses from the drop in Aker Carbon's long position.| Fuel Tech vs. Federal Signal | Fuel Tech vs. CECO Environmental Corp | Fuel Tech vs. Zurn Elkay Water | Fuel Tech vs. Greenlane Renewables |
| Aker Carbon vs. TOMI Environmental Solutions | Aker Carbon vs. Zurn Elkay Water | Aker Carbon vs. Federal Signal | Aker Carbon vs. Energy Recovery |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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