Correlation Between Fusion Fuel and Fortum Oyj
Can any of the company-specific risk be diversified away by investing in both Fusion Fuel and Fortum Oyj 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 Fortum Oyj 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 Fortum Oyj ADR, you can compare the effects of market volatilities on Fusion Fuel and Fortum Oyj 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 Fortum Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fusion Fuel and Fortum Oyj.
Diversification Opportunities for Fusion Fuel and Fortum Oyj
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Fusion and Fortum is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Fusion Fuel Green and Fortum Oyj ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortum Oyj 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 Fortum Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortum Oyj ADR has no effect on the direction of Fusion Fuel i.e., Fusion Fuel and Fortum Oyj go up and down completely randomly.
Pair Corralation between Fusion Fuel and Fortum Oyj
Assuming the 90 days horizon Fusion Fuel Green is expected to under-perform the Fortum Oyj. In addition to that, Fusion Fuel is 6.32 times more volatile than Fortum Oyj ADR. It trades about -0.06 of its total potential returns per unit of risk. Fortum Oyj ADR is currently generating about 0.03 per unit of volatility. If you would invest 287.00 in Fortum Oyj ADR on November 4, 2024 and sell it today you would earn a total of 2.00 from holding Fortum Oyj ADR or generate 0.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fusion Fuel Green vs. Fortum Oyj ADR
Performance |
| Timeline |
| Fusion Fuel Green |
| Fortum Oyj ADR |
Fusion Fuel and Fortum Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fusion Fuel and Fortum Oyj
The main advantage of trading using opposite Fusion Fuel and Fortum Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fusion Fuel position performs unexpectedly, Fortum Oyj 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 Fortum Oyj will offset losses from the drop in Fortum Oyj'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 |
| Fortum Oyj vs. Constellation Energy Corp | Fortum Oyj vs. Astra Energy | Fortum Oyj vs. Powertap Hydrogen Capital | Fortum Oyj vs. Brenmiller Energy Ltd |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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