Correlation Between Everfuel and Aker Carbon

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

By analyzing existing cross correlation between Everfuel AS and Aker Carbon Capture, you can compare the effects of market volatilities on Everfuel and Aker Carbon 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 Everfuel with a short position of Aker Carbon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Everfuel and Aker Carbon.

Diversification Opportunities for Everfuel and Aker Carbon

0.2

Correlation Coefficient

Everfuel  Aker Carbon

Modest diversification

The 3 months correlation between Everfuel and Aker is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Everfuel AS and Aker Carbon Capture in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aker Carbon Capture and Everfuel 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 Everfuel AS are associated (or correlated) with Aker Carbon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aker Carbon Capture has no effect on the direction of Everfuel i.e., Everfuel and Aker Carbon go up and down completely randomly.

Pair Corralation between Everfuel and Aker Carbon

Assuming the 90 days trading horizon Everfuel AS is expected to under-perform the Aker Carbon. In addition to that, Everfuel is 1.38 times more volatile than Aker Carbon Capture. It trades about -0.02 of its total potential returns per unit of risk. Aker Carbon Capture is currently generating about -0.02 per unit of volatility. If you would invest  1,151  in Aker Carbon Capture on September 14, 2024 and sell it today you would lose (554.00) from holding Aker Carbon Capture or give up 48.13% of portfolio value over 90 days.

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

Everfuel AS  vs.  Aker Carbon Capture

Everfuel AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Everfuel AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Everfuel is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Aker Carbon Capture

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aker Carbon Capture has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Aker Carbon is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Everfuel and Aker Carbon

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

The idea behind Everfuel AS and Aker Carbon Capture 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.