Correlation Between Stem and Fusion Fuel

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

By analyzing existing cross correlation between Stem Inc and Fusion Fuel Green, you can compare the effects of market volatilities on Stem and Fusion Fuel 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 Stem with a short position of Fusion Fuel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stem and Fusion Fuel.

Diversification Opportunities for Stem and Fusion Fuel

-0.4

Correlation Coefficient

Stem  Fusion Fuel

Very good diversification

The 3 months correlation between Stem and Fusion is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Stem Inc and Fusion Fuel Green in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fusion Fuel Green and Stem 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 Stem Inc are associated (or correlated) with Fusion Fuel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fusion Fuel Green has no effect on the direction of Stem i.e., Stem and Fusion Fuel go up and down completely randomly.

Pair Corralation between Stem and Fusion Fuel

Given the investment horizon of 90 days Stem Inc is expected to generate 0.8 times more return on investment than Fusion Fuel. However, Stem Inc is 1.26 times less risky than Fusion Fuel. It trades about 0.21 of its potential returns per unit of risk. Fusion Fuel Green is currently generating about -0.01 per unit of risk. If you would invest  636.00  in Stem Inc on July 1, 2025 and sell it today you would earn a total of  1,108  from holding Stem Inc or generate 174.21% return on investment over 90 days.

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

Stem Inc  vs.  Fusion Fuel Green

Stem Inc

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Stem Inc are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent technical and fundamental indicators, Stem displayed solid returns over the last few months and may actually be approaching a breakup point.

Fusion Fuel Green

Risk-Adjusted Performance

Weakest

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 latest abnormal performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Stem and Fusion Fuel

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

The idea behind Stem Inc and Fusion Fuel Green 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.