Correlation Between Fusion Fuel and Orsted A/S
Can any of the company-specific risk be diversified away by investing in both Fusion Fuel and Orsted A/S 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 Fusion Fuel and Orsted A/S into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fusion Fuel Green and Orsted AS ADR, you can compare the effects of market volatilities on Fusion Fuel and Orsted A/S 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 Fusion Fuel with a short position of Orsted A/S. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fusion Fuel and Orsted A/S.
Diversification Opportunities for Fusion Fuel and Orsted A/S
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fusion and Orsted is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Fusion Fuel Green and Orsted AS ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orsted AS ADR and Fusion Fuel 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 Fusion Fuel Green are associated (or correlated) with Orsted A/S. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orsted AS ADR has no effect on the direction of Fusion Fuel i.e., Fusion Fuel and Orsted A/S go up and down completely randomly.
Pair Corralation between Fusion Fuel and Orsted A/S
Assuming the 90 days horizon Fusion Fuel Green is expected to generate 8.04 times more return on investment than Orsted A/S. However, Fusion Fuel is 8.04 times more volatile than Orsted AS ADR. It trades about 0.01 of its potential returns per unit of risk. Orsted AS ADR is currently generating about -0.18 per unit of risk. If you would invest 3.30 in Fusion Fuel Green on August 28, 2024 and sell it today you would lose (1.80) from holding Fusion Fuel Green or give up 54.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fusion Fuel Green vs. Orsted AS ADR
Performance |
| Timeline |
| Fusion Fuel Green |
| Orsted AS ADR |
Fusion Fuel and Orsted A/S Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fusion Fuel and Orsted A/S
The main advantage of trading using opposite Fusion Fuel and Orsted A/S positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fusion Fuel position performs unexpectedly, Orsted A/S 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 Orsted A/S will offset losses from the drop in Orsted A/S's long position.| Fusion Fuel vs. Fusion Fuel Green | Fusion Fuel vs. Advent Technologies Holdings | Fusion Fuel vs. Eos Energy Enterprises | Fusion Fuel vs. CuriosityStream |
| Orsted A/S vs. Brookfield Renewable Partners | Orsted A/S vs. Brookfield Renewable Corp | Orsted A/S vs. Clearway Energy Class | Orsted A/S vs. Atlantica Sustainable Infrastructure |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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