Correlation Between Fusion Fuel and Advent Technologies

Can any of the company-specific risk be diversified away by investing in both Fusion Fuel and Advent Technologies 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 Advent Technologies 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 Advent Technologies Holdings, you can compare the effects of market volatilities on Fusion Fuel and Advent Technologies 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 Advent Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fusion Fuel and Advent Technologies.

Diversification Opportunities for Fusion Fuel and Advent Technologies

0.75

Correlation Coefficient

Fusion Fuel  Advent Technologies

Poor diversification

The 3 months correlation between Fusion and Advent is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Fusion Fuel Green and Advent Technologies Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advent Technologies 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 Advent Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advent Technologies has no effect on the direction of Fusion Fuel i.e., Fusion Fuel and Advent Technologies go up and down completely randomly.

Pair Corralation between Fusion Fuel and Advent Technologies

Given the investment horizon of 90 days Fusion Fuel is expected to generate 1.16 times less return on investment than Advent Technologies. In addition to that, Fusion Fuel is 1.43 times more volatile than Advent Technologies Holdings. It trades about 0.09 of its total potential returns per unit of risk. Advent Technologies Holdings is currently generating about 0.15 per unit of volatility. If you would invest  0.82  in Advent Technologies Holdings on July 29, 2024 and sell it today you would earn a total of  0.16  from holding Advent Technologies Holdings or generate 19.51% return on investment over 90 days.

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

Fusion Fuel Green  vs.  Advent Technologies Holdings

Fusion Fuel Green

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fusion Fuel Green has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in November 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Advent Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Advent Technologies Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Advent Technologies is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Fusion Fuel and Advent Technologies

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

The idea behind Fusion Fuel Green and Advent Technologies Holdings 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.