Correlation Between Ensurge Micropower and Storebrand ASA

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

Diversification Opportunities for Ensurge Micropower and Storebrand ASA

-0.55

Correlation Coefficient

Ensurge Micropower  Storebrand ASA

Excellent diversification

The 3 months correlation between Ensurge and Storebrand is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Ensurge Micropower ASA and Storebrand ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Storebrand ASA 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 Storebrand ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Storebrand ASA has no effect on the direction of Ensurge Micropower i.e., Ensurge Micropower and Storebrand ASA go up and down completely randomly.

Pair Corralation between Ensurge Micropower and Storebrand ASA

Assuming the 90 days trading horizon Ensurge Micropower ASA is expected to under-perform the Storebrand ASA. In addition to that, Ensurge Micropower is 4.66 times more volatile than Storebrand ASA. It trades about -0.1 of its total potential returns per unit of risk. Storebrand ASA is currently generating about 0.1 per unit of volatility. If you would invest  11,440  in Storebrand ASA on August 30, 2024 and sell it today you would earn a total of  810.00  from holding Storebrand ASA or generate 7.08% 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.  Storebrand ASA

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 December 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Storebrand ASA

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Storebrand ASA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental drivers, Storebrand ASA may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Ensurge Micropower and Storebrand ASA

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

The idea behind Ensurge Micropower ASA and Storebrand ASA 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.