Correlation Between Ensurge Micropower and Arctic Fish

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

By analyzing existing cross correlation between Ensurge Micropower ASA and Arctic Fish Holding, you can compare the effects of market volatilities on Ensurge Micropower and Arctic Fish 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 Ensurge Micropower with a short position of Arctic Fish. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ensurge Micropower and Arctic Fish.

Diversification Opportunities for Ensurge Micropower and Arctic Fish

-0.46

Correlation Coefficient

Ensurge Micropower  Arctic Fish

Very good diversification

The 3 months correlation between Ensurge and Arctic is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Ensurge Micropower ASA and Arctic Fish Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arctic Fish Holding and Ensurge Micropower 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 Ensurge Micropower ASA are associated (or correlated) with Arctic Fish. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arctic Fish Holding has no effect on the direction of Ensurge Micropower i.e., Ensurge Micropower and Arctic Fish go up and down completely randomly.

Pair Corralation between Ensurge Micropower and Arctic Fish

Assuming the 90 days trading horizon Ensurge Micropower ASA is expected to under-perform the Arctic Fish. In addition to that, Ensurge Micropower is 1.3 times more volatile than Arctic Fish Holding. It trades about -0.08 of its total potential returns per unit of risk. Arctic Fish Holding is currently generating about 0.16 per unit of volatility. If you would invest  4,820  in Arctic Fish Holding on September 4, 2024 and sell it today you would earn a total of  2,280  from holding Arctic Fish Holding or generate 47.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Ensurge Micropower ASA  vs.  Arctic Fish Holding

Ensurge Micropower ASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ensurge Micropower ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Arctic Fish Holding

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Arctic Fish Holding are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Arctic Fish displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ensurge Micropower and Arctic Fish

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

The idea behind Ensurge Micropower ASA and Arctic Fish Holding 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.