Correlation Between Everfuel and Aker Horizons

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

Diversification Opportunities for Everfuel and Aker Horizons

0.2

Correlation Coefficient

Everfuel  Aker Horizons

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 Horizons AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aker Horizons AS 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 Horizons. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aker Horizons AS has no effect on the direction of Everfuel i.e., Everfuel and Aker Horizons go up and down completely randomly.

Pair Corralation between Everfuel and Aker Horizons

Assuming the 90 days trading horizon Everfuel AS is expected to generate 1.27 times more return on investment than Aker Horizons. However, Everfuel is 1.27 times more volatile than Aker Horizons AS. It trades about -0.02 of its potential returns per unit of risk. Aker Horizons AS is currently generating about -0.07 per unit of risk. If you would invest  3,845  in Everfuel AS on September 14, 2024 and sell it today you would lose (2,553) from holding Everfuel AS or give up 66.4% 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 Horizons AS

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 Horizons AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aker Horizons AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical indicators, Aker Horizons 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 Horizons

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

The idea behind Everfuel AS and Aker Horizons AS 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.