Correlation Between ABB and FREYR Battery
Can any of the company-specific risk be diversified away by investing in both ABB 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 ABB and FREYR Battery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ABB and FREYR Battery SA, you can compare the effects of market volatilities on ABB 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 ABB with a short position of FREYR Battery. Check out your portfolio center. Please also check ongoing floating volatility patterns of ABB and FREYR Battery.
Diversification Opportunities for ABB and FREYR Battery
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ABB and FREYR is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding ABB 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 ABB 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 ABB 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 ABB i.e., ABB and FREYR Battery go up and down completely randomly.
Pair Corralation between ABB and FREYR Battery
Assuming the 90 days horizon ABB is expected to under-perform the FREYR Battery. But the pink sheet apears to be less risky and, when comparing its historical volatility, ABB is 8.5 times less risky than FREYR Battery. The pink sheet trades about -0.07 of its potential returns per unit of risk. The FREYR Battery SA is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 105.00 in FREYR Battery SA on August 29, 2024 and sell it today you would earn a total of 110.00 from holding FREYR Battery SA or generate 104.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ABB vs. FREYR Battery SA
Performance |
| Timeline |
| ABB |
| FREYR Battery SA |
ABB and FREYR Battery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ABB and FREYR Battery
The main advantage of trading using opposite ABB and FREYR Battery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ABB 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 ABB 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.| FREYR Battery vs. Solid Power | FREYR Battery vs. Enovix Corp | FREYR Battery vs. Microvast Holdings | FREYR Battery vs. LiCycle Holdings Corp |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Fundamental Analysis View fundamental data based on most recent published financial statements |