Correlation Between Alfen NV and Powerstorm Holdings
Can any of the company-specific risk be diversified away by investing in both Alfen NV and Powerstorm Holdings 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 Alfen NV and Powerstorm Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alfen NV and Powerstorm Holdings, you can compare the effects of market volatilities on Alfen NV and Powerstorm Holdings 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 Alfen NV with a short position of Powerstorm Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alfen NV and Powerstorm Holdings.
Diversification Opportunities for Alfen NV and Powerstorm Holdings
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Alfen and Powerstorm is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Alfen NV and Powerstorm Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Powerstorm Holdings and Alfen NV 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 Alfen NV are associated (or correlated) with Powerstorm Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Powerstorm Holdings has no effect on the direction of Alfen NV i.e., Alfen NV and Powerstorm Holdings go up and down completely randomly.
Pair Corralation between Alfen NV and Powerstorm Holdings
Assuming the 90 days horizon Alfen NV is expected to under-perform the Powerstorm Holdings. But the otc stock apears to be less risky and, when comparing its historical volatility, Alfen NV is 3.91 times less risky than Powerstorm Holdings. The otc stock trades about -0.21 of its potential returns per unit of risk. The Powerstorm Holdings is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 2.23 in Powerstorm Holdings on September 12, 2024 and sell it today you would lose (0.63) from holding Powerstorm Holdings or give up 28.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Alfen NV vs. Powerstorm Holdings
Performance |
| Timeline |
| Alfen NV |
| Powerstorm Holdings |
Alfen NV and Powerstorm Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alfen NV and Powerstorm Holdings
The main advantage of trading using opposite Alfen NV and Powerstorm Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alfen NV position performs unexpectedly, Powerstorm Holdings 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 Powerstorm Holdings will offset losses from the drop in Powerstorm Holdings' long position.| Alfen NV vs. AFC Energy plc | Alfen NV vs. ADS TEC ENERGY PLC | Alfen NV vs. ABB | Alfen NV vs. Ads Tec Energy |
| Powerstorm Holdings vs. Solid Power | Powerstorm Holdings vs. Plug Power | Powerstorm Holdings vs. FREYR Battery SA | Powerstorm Holdings vs. FuelCell Energy |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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