Correlation Between Napatech and Alternus Energy
Can any of the company-specific risk be diversified away by investing in both Napatech and Alternus Energy 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 Napatech and Alternus Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Napatech AS and Alternus Energy Group, you can compare the effects of market volatilities on Napatech and Alternus Energy 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 Napatech with a short position of Alternus Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Napatech and Alternus Energy.
Diversification Opportunities for Napatech and Alternus Energy
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Napatech and Alternus is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Napatech AS and Alternus Energy Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alternus Energy Group and Napatech 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 Napatech AS are associated (or correlated) with Alternus Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alternus Energy Group has no effect on the direction of Napatech i.e., Napatech and Alternus Energy go up and down completely randomly.
Pair Corralation between Napatech and Alternus Energy
Assuming the 90 days trading horizon Napatech AS is expected to under-perform the Alternus Energy. But the stock apears to be less risky and, when comparing its historical volatility, Napatech AS is 4.81 times less risky than Alternus Energy. The stock trades about -0.09 of its potential returns per unit of risk. The Alternus Energy Group is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 110.00 in Alternus Energy Group on November 4, 2024 and sell it today you would lose (10.00) from holding Alternus Energy Group or give up 9.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Napatech AS vs. Alternus Energy Group
Performance |
| Timeline |
| Napatech AS |
| Alternus Energy Group |
Napatech and Alternus Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Napatech and Alternus Energy
The main advantage of trading using opposite Napatech and Alternus Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Napatech position performs unexpectedly, Alternus Energy 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 Alternus Energy will offset losses from the drop in Alternus Energy's long position.| Napatech vs. Idex ASA | Napatech vs. Next Biometrics Group | Napatech vs. Polight ASA | Napatech vs. Kitron ASA |
| Alternus Energy vs. Sunndal Sparebank | Alternus Energy vs. Grieg Seafood ASA | Alternus Energy vs. Clean Seas Seafood | Alternus Energy vs. Sogn Sparebank |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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