Correlation Between Alternus Energy and Equinor ASA
Can any of the company-specific risk be diversified away by investing in both Alternus Energy and Equinor 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 Alternus Energy and Equinor ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alternus Energy Group and Equinor ASA, you can compare the effects of market volatilities on Alternus Energy and Equinor 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 Alternus Energy with a short position of Equinor ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alternus Energy and Equinor ASA.
Diversification Opportunities for Alternus Energy and Equinor ASA
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Alternus and Equinor is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Alternus Energy Group and Equinor ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equinor ASA and Alternus Energy 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 Alternus Energy Group are associated (or correlated) with Equinor ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equinor ASA has no effect on the direction of Alternus Energy i.e., Alternus Energy and Equinor ASA go up and down completely randomly.
Pair Corralation between Alternus Energy and Equinor ASA
Assuming the 90 days trading horizon Alternus Energy Group is expected to under-perform the Equinor ASA. In addition to that, Alternus Energy is 7.99 times more volatile than Equinor ASA. It trades about -0.19 of its total potential returns per unit of risk. Equinor ASA is currently generating about 0.09 per unit of volatility. If you would invest 25,774 in Equinor ASA on September 1, 2024 and sell it today you would earn a total of 946.00 from holding Equinor ASA or generate 3.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Alternus Energy Group vs. Equinor ASA
Performance |
| Timeline |
| Alternus Energy Group |
| Equinor ASA |
Alternus Energy and Equinor ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alternus Energy and Equinor ASA
The main advantage of trading using opposite Alternus Energy and Equinor ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alternus Energy position performs unexpectedly, Equinor 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 Equinor ASA will offset losses from the drop in Equinor ASA's long position.| Alternus Energy vs. Elkem ASA | Alternus Energy vs. Integrated Wind Solutions | Alternus Energy vs. Vow ASA | Alternus Energy vs. North Energy ASA |
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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 Valuation module to check real value of public entities based on technical and fundamental data.
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