Correlation Between ESS Tech and FREYR Battery
Can any of the company-specific risk be diversified away by investing in both ESS Tech 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 ESS Tech and FREYR Battery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ESS Tech and FREYR Battery SA, you can compare the effects of market volatilities on ESS Tech 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 ESS Tech with a short position of FREYR Battery. Check out your portfolio center. Please also check ongoing floating volatility patterns of ESS Tech and FREYR Battery.
Diversification Opportunities for ESS Tech and FREYR Battery
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between ESS and FREYR is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding ESS Tech 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 ESS Tech 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 ESS Tech 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 ESS Tech i.e., ESS Tech and FREYR Battery go up and down completely randomly.
Pair Corralation between ESS Tech and FREYR Battery
Considering the 90-day investment horizon ESS Tech is expected to under-perform the FREYR Battery. But the stock apears to be less risky and, when comparing its historical volatility, ESS Tech is 1.05 times less risky than FREYR Battery. The stock trades about -0.03 of its potential returns per unit of risk. The FREYR Battery SA is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 919.00 in FREYR Battery SA on August 28, 2024 and sell it today you would lose (696.00) from holding FREYR Battery SA or give up 75.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ESS Tech vs. FREYR Battery SA
Performance |
| Timeline |
| ESS Tech |
| FREYR Battery SA |
ESS Tech and FREYR Battery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ESS Tech and FREYR Battery
The main advantage of trading using opposite ESS Tech and FREYR Battery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ESS Tech 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.| ESS Tech vs. Fluence Energy | ESS Tech vs. Solid Power | ESS Tech vs. Eos Energy Enterprises | ESS Tech vs. FREYR Battery SA |
| 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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