Correlation Between Everfuel and Vow ASA
Can any of the company-specific risk be diversified away by investing in both Everfuel and Vow 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 Everfuel and Vow ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Everfuel AS and Vow ASA, you can compare the effects of market volatilities on Everfuel and Vow 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 Everfuel with a short position of Vow ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Everfuel and Vow ASA.
Diversification Opportunities for Everfuel and Vow ASA
Good diversification
The 3 months correlation between Everfuel and Vow is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Everfuel AS and Vow ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vow ASA and Everfuel 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 Everfuel AS are associated (or correlated) with Vow ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vow ASA has no effect on the direction of Everfuel i.e., Everfuel and Vow ASA go up and down completely randomly.
Pair Corralation between Everfuel and Vow ASA
Assuming the 90 days trading horizon Everfuel AS is expected to generate 0.12 times more return on investment than Vow ASA. However, Everfuel AS is 8.02 times less risky than Vow ASA. It trades about 0.05 of its potential returns per unit of risk. Vow ASA is currently generating about -0.26 per unit of risk. If you would invest 1,280 in Everfuel AS on September 1, 2024 and sell it today you would earn a total of 14.00 from holding Everfuel AS or generate 1.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Everfuel AS vs. Vow ASA
Performance |
| Timeline |
| Everfuel AS |
| Vow ASA |
Everfuel and Vow ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Everfuel and Vow ASA
The main advantage of trading using opposite Everfuel and Vow ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Everfuel position performs unexpectedly, Vow 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 Vow ASA will offset losses from the drop in Vow ASA's long position.The idea behind Everfuel AS and Vow 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.| Vow ASA vs. Hexagon Composites ASA | Vow ASA vs. Vow Green Metals | Vow ASA vs. REC Silicon ASA | Vow ASA vs. Aker Carbon Capture |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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