Correlation Between Strategic Investments and Green Hydrogen

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

By analyzing existing cross correlation between Strategic Investments AS and Green Hydrogen Systems, you can compare the effects of market volatilities on Strategic Investments and Green Hydrogen 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 Strategic Investments with a short position of Green Hydrogen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Strategic Investments and Green Hydrogen.

Diversification Opportunities for Strategic Investments and Green Hydrogen

-0.78

Correlation Coefficient

Strategic Investments  Green Hydrogen

Pay attention - limited upside

The 3 months correlation between Strategic and Green is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Strategic Investments AS and Green Hydrogen Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green Hydrogen Systems and Strategic Investments 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 Strategic Investments AS are associated (or correlated) with Green Hydrogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green Hydrogen Systems has no effect on the direction of Strategic Investments i.e., Strategic Investments and Green Hydrogen go up and down completely randomly.

Pair Corralation between Strategic Investments and Green Hydrogen

Assuming the 90 days trading horizon Strategic Investments AS is expected to generate 1.11 times more return on investment than Green Hydrogen. However, Strategic Investments is 1.11 times more volatile than Green Hydrogen Systems. It trades about 0.18 of its potential returns per unit of risk. Green Hydrogen Systems is currently generating about 0.02 per unit of risk. If you would invest  109.00  in Strategic Investments AS on February 21, 2024 and sell it today you would earn a total of  10.00  from holding Strategic Investments AS or generate 9.17% return on investment over 90 days.

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

Strategic Investments AS  vs.  Green Hydrogen Systems

Strategic Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Strategic Investments AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Strategic Investments is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Green Hydrogen Systems

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Green Hydrogen Systems are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Green Hydrogen sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Strategic Investments and Green Hydrogen

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

The idea behind Strategic Investments AS and Green Hydrogen Systems 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 Transaction History module to view history of all your transactions and understand their impact on performance.