Correlation Between FutureFuel Corp and Perimeter Solutions

Can any of the company-specific risk be diversified away by investing in both FutureFuel Corp and Perimeter Solutions 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 FutureFuel Corp and Perimeter Solutions into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between FutureFuel Corp and Perimeter Solutions SA, you can compare the effects of market volatilities on FutureFuel Corp and Perimeter Solutions 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 FutureFuel Corp with a short position of Perimeter Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of FutureFuel Corp and Perimeter Solutions.

Diversification Opportunities for FutureFuel Corp and Perimeter Solutions

-0.39

Correlation Coefficient

FutureFuel Corp  Perimeter Solutions

Very good diversification

The 3 months correlation between FutureFuel and Perimeter is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding FutureFuel Corp and Perimeter Solutions SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perimeter Solutions and FutureFuel Corp 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 FutureFuel Corp are associated (or correlated) with Perimeter Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perimeter Solutions has no effect on the direction of FutureFuel Corp i.e., FutureFuel Corp and Perimeter Solutions go up and down completely randomly.

Pair Corralation between FutureFuel Corp and Perimeter Solutions

Allowing for the 90-day total investment horizon FutureFuel Corp is expected to under-perform the Perimeter Solutions. But the stock apears to be less risky and, when comparing its historical volatility, FutureFuel Corp is 1.34 times less risky than Perimeter Solutions. The stock trades about -0.06 of its potential returns per unit of risk. The Perimeter Solutions SA is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  938.00  in Perimeter Solutions SA on March 7, 2025 and sell it today you would earn a total of  327.00  from holding Perimeter Solutions SA or generate 34.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

FutureFuel Corp  vs.  Perimeter Solutions SA

FutureFuel Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days FutureFuel Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Perimeter Solutions

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Perimeter Solutions SA are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Perimeter Solutions displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FutureFuel Corp and Perimeter Solutions

The main advantage of trading using opposite FutureFuel Corp and Perimeter Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FutureFuel Corp position performs unexpectedly, Perimeter Solutions 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 Perimeter Solutions will offset losses from the drop in Perimeter Solutions' long position.

The idea behind FutureFuel Corp and Perimeter Solutions SA 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.

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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.