Correlation Between FREYR Battery and Novonix
Can any of the company-specific risk be diversified away by investing in both FREYR Battery and Novonix 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 Novonix 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 Novonix Ltd ADR, you can compare the effects of market volatilities on FREYR Battery and Novonix 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 Novonix. Check out your portfolio center. Please also check ongoing floating volatility patterns of FREYR Battery and Novonix.
Diversification Opportunities for FREYR Battery and Novonix
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between FREYR and Novonix is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding FREYR Battery SA and Novonix Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novonix Ltd ADR 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 Novonix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novonix Ltd ADR has no effect on the direction of FREYR Battery i.e., FREYR Battery and Novonix go up and down completely randomly.
Pair Corralation between FREYR Battery and Novonix
Given the investment horizon of 90 days FREYR Battery SA is expected to under-perform the Novonix. But the stock apears to be less risky and, when comparing its historical volatility, FREYR Battery SA is 1.12 times less risky than Novonix. The stock trades about -0.39 of its potential returns per unit of risk. The Novonix Ltd ADR is currently generating about -0.24 of returns per unit of risk over similar time horizon. If you would invest 191.00 in Novonix Ltd ADR on November 3, 2024 and sell it today you would lose (45.00) from holding Novonix Ltd ADR or give up 23.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FREYR Battery SA vs. Novonix Ltd ADR
Performance |
| Timeline |
| FREYR Battery SA |
| Novonix Ltd ADR |
FREYR Battery and Novonix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FREYR Battery and Novonix
The main advantage of trading using opposite FREYR Battery and Novonix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FREYR Battery position performs unexpectedly, Novonix 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 Novonix will offset losses from the drop in Novonix's long position.| FREYR Battery vs. Solid Power | FREYR Battery vs. Enovix Corp | FREYR Battery vs. Microvast Holdings | FREYR Battery vs. LiCycle Holdings Corp |
| Novonix vs. Magnis Energy Technologies | Novonix vs. Exro Technologies | Novonix vs. Ilika plc | Novonix vs. FuelPositive 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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