Correlation Between Energizer Holdings and FREYR Battery

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

By analyzing existing cross correlation between Energizer Holdings and FREYR Battery SA, you can compare the effects of market volatilities on Energizer Holdings and FREYR Battery 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 Energizer Holdings with a short position of FREYR Battery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energizer Holdings and FREYR Battery.

Diversification Opportunities for Energizer Holdings and FREYR Battery

0.76

Correlation Coefficient

Energizer Holdings  FREYR Battery

Poor diversification

The 3 months correlation between Energizer and FREYR is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Energizer Holdings and FREYR Battery SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FREYR Battery SA and Energizer Holdings 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 Energizer Holdings are associated (or correlated) with FREYR Battery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FREYR Battery SA has no effect on the direction of Energizer Holdings i.e., Energizer Holdings and FREYR Battery go up and down completely randomly.

Pair Corralation between Energizer Holdings and FREYR Battery

Considering the 90-day investment horizon Energizer Holdings is expected to generate 3.09 times less return on investment than FREYR Battery. But when comparing it to its historical volatility, Energizer Holdings is 6.8 times less risky than FREYR Battery. It trades about 0.25 of its potential returns per unit of risk. FREYR Battery SA is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  101.00  in FREYR Battery SA on September 13, 2024 and sell it today you would earn a total of  65.00  from holding FREYR Battery SA or generate 64.36% return on investment over 90 days.

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

Energizer Holdings  vs.  FREYR Battery SA

Energizer Holdings

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Energizer Holdings are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, Energizer Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

FREYR Battery SA

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FREYR Battery SA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, FREYR Battery showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Energizer Holdings and FREYR Battery

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

The idea behind Energizer Holdings and FREYR Battery SA 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.