Correlation Between FREYR Battery and Advanced Energy
Can any of the company-specific risk be diversified away by investing in both FREYR Battery and Advanced Energy 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 FREYR Battery and Advanced Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FREYR Battery SA and Advanced Energy Industries, you can compare the effects of market volatilities on FREYR Battery and Advanced Energy 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 FREYR Battery with a short position of Advanced Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of FREYR Battery and Advanced Energy.
Diversification Opportunities for FREYR Battery and Advanced Energy
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FREYR and Advanced is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding FREYR Battery SA and Advanced Energy Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Energy Indu and FREYR Battery 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 FREYR Battery SA are associated (or correlated) with Advanced Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Energy Indu has no effect on the direction of FREYR Battery i.e., FREYR Battery and Advanced Energy go up and down completely randomly.
Pair Corralation between FREYR Battery and Advanced Energy
Given the investment horizon of 90 days FREYR Battery SA is expected to generate 3.39 times more return on investment than Advanced Energy. However, FREYR Battery is 3.39 times more volatile than Advanced Energy Industries. It trades about 0.02 of its potential returns per unit of risk. Advanced Energy Industries is currently generating about 0.02 per unit of risk. If you would invest 195.00 in FREYR Battery SA on September 14, 2024 and sell it today you would lose (30.00) from holding FREYR Battery SA or give up 15.38% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
FREYR Battery SA vs. Advanced Energy Industries
Performance |
Timeline |
FREYR Battery SA |
Advanced Energy Indu |
FREYR Battery and Advanced Energy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with FREYR Battery and Advanced Energy
The main advantage of trading using opposite FREYR Battery and Advanced Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FREYR Battery position performs unexpectedly, Advanced Energy 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 Advanced Energy will offset losses from the drop in Advanced Energy's long position.FREYR Battery vs. Energizer Holdings | FREYR Battery vs. Acuity Brands | FREYR Battery vs. Espey Mfg Electronics | FREYR Battery vs. Preformed Line Products |
Advanced Energy vs. MKS Instruments | Advanced Energy vs. Axcelis Technologies | Advanced Energy vs. Entegris | Advanced Energy vs. Cohu Inc |
Check out your portfolio center.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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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