Correlation Between FREYR Battery and ESS Tech
Can any of the company-specific risk be diversified away by investing in both FREYR Battery and ESS Tech 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 ESS Tech 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 ESS Tech, you can compare the effects of market volatilities on FREYR Battery and ESS Tech 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 ESS Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of FREYR Battery and ESS Tech.
Diversification Opportunities for FREYR Battery and ESS Tech
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between FREYR and ESS is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding FREYR Battery SA and ESS Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ESS Tech 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 ESS Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ESS Tech has no effect on the direction of FREYR Battery i.e., FREYR Battery and ESS Tech go up and down completely randomly.
Pair Corralation between FREYR Battery and ESS Tech
Given the investment horizon of 90 days FREYR Battery SA is expected to generate 1.71 times more return on investment than ESS Tech. However, FREYR Battery is 1.71 times more volatile than ESS Tech. It trades about 0.27 of its potential returns per unit of risk. ESS Tech is currently generating about -0.1 per unit of risk. If you would invest 105.00 in FREYR Battery SA on August 27, 2024 and sell it today you would earn a total of 118.00 from holding FREYR Battery SA or generate 112.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FREYR Battery SA vs. ESS Tech
Performance |
| Timeline |
| FREYR Battery SA |
| ESS Tech |
FREYR Battery and ESS Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FREYR Battery and ESS Tech
The main advantage of trading using opposite FREYR Battery and ESS Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FREYR Battery position performs unexpectedly, ESS Tech 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 ESS Tech will offset losses from the drop in ESS Tech's long position.| FREYR Battery vs. Solid Power | FREYR Battery vs. Enovix Corp | FREYR Battery vs. Microvast Holdings | FREYR Battery vs. LiCycle Holdings Corp |
| ESS Tech vs. Fluence Energy | ESS Tech vs. Solid Power | ESS Tech vs. Eos Energy Enterprises | ESS Tech vs. FREYR Battery SA |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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