Correlation Between Fusion Fuel and Alternus Energy

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

Diversification Opportunities for Fusion Fuel and Alternus Energy

-0.44

Correlation Coefficient

Fusion Fuel  Alternus Energy

Very good diversification

The 3 months correlation between Fusion and Alternus is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Fusion Fuel Green and Alternus Energy Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alternus Energy Group 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 Alternus Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alternus Energy Group has no effect on the direction of Fusion Fuel i.e., Fusion Fuel and Alternus Energy go up and down completely randomly.

Pair Corralation between Fusion Fuel and Alternus Energy

Given the investment horizon of 90 days Fusion Fuel Green is expected to generate 0.9 times more return on investment than Alternus Energy. However, Fusion Fuel Green is 1.11 times less risky than Alternus Energy. It trades about -0.03 of its potential returns per unit of risk. Alternus Energy Group is currently generating about -0.21 per unit of risk. If you would invest  131.00  in Fusion Fuel Green on January 30, 2025 and sell it today you would lose (101.00) from holding Fusion Fuel Green or give up 77.1% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	81.38%
Values	Daily Returns

Fusion Fuel Green  vs.  Alternus Energy Group

Fusion Fuel Green

Risk-Adjusted Performance

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 weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in May 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Alternus Energy Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alternus Energy Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in May 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Fusion Fuel and Alternus Energy

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

The idea behind Fusion Fuel Green and Alternus Energy Group 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.