Correlation Between CO2 Energy and FG Merger

Can any of the company-specific risk be diversified away by investing in both CO2 Energy and FG Merger 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 CO2 Energy and FG Merger into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CO2 Energy Transition and FG Merger II, you can compare the effects of market volatilities on CO2 Energy and FG Merger 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 CO2 Energy with a short position of FG Merger. Check out your portfolio center. Please also check ongoing floating volatility patterns of CO2 Energy and FG Merger.

Diversification Opportunities for CO2 Energy and FG Merger

0.49

Correlation Coefficient

CO2 Energy  FG Merger

Very weak diversification

The 3 months correlation between CO2 and FGMC is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding CO2 Energy Transition and FG Merger II in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FG Merger II and CO2 Energy 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 CO2 Energy Transition are associated (or correlated) with FG Merger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FG Merger II has no effect on the direction of CO2 Energy i.e., CO2 Energy and FG Merger go up and down completely randomly.

Pair Corralation between CO2 Energy and FG Merger

Assuming the 90 days horizon CO2 Energy is expected to generate 2.28 times less return on investment than FG Merger. But when comparing it to its historical volatility, CO2 Energy Transition is 1.27 times less risky than FG Merger. It trades about 0.09 of its potential returns per unit of risk. FG Merger II is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  986.00  in FG Merger II on July 10, 2025 and sell it today you would earn a total of  15.00  from holding FG Merger II or generate 1.52% return on investment over 90 days.

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

CO2 Energy Transition  vs.  FG Merger II

CO2 Energy Transition

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in CO2 Energy Transition are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable primary indicators, CO2 Energy is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

FG Merger II

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FG Merger II are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound primary indicators, FG Merger is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with CO2 Energy and FG Merger

The main advantage of trading using opposite CO2 Energy and FG Merger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CO2 Energy position performs unexpectedly, FG Merger 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 FG Merger will offset losses from the drop in FG Merger's long position.

The idea behind CO2 Energy Transition and FG Merger II 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.