Correlation Between Fusion Fuel and Azure Power

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

Diversification Opportunities for Fusion Fuel and Azure Power

0.38

Correlation Coefficient

Fusion Fuel  Azure Power

Weak diversification

The 3 months correlation between Fusion and Azure is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Fusion Fuel Green and Azure Power Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Azure Power Global 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 Azure Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Azure Power Global has no effect on the direction of Fusion Fuel i.e., Fusion Fuel and Azure Power go up and down completely randomly.

Pair Corralation between Fusion Fuel and Azure Power

If you would invest  53.00  in Fusion Fuel Green on July 29, 2024 and sell it today you would earn a total of  6.00  from holding Fusion Fuel Green or generate 11.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	4.55%
Values	Daily Returns

Fusion Fuel Green  vs.  Azure Power Global

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.

Azure Power Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Azure Power Global has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Azure Power is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Fusion Fuel and Azure Power

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

The idea behind Fusion Fuel Green and Azure Power Global 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 Commodity Directory module to find actively traded commodities issued by global exchanges.