Correlation Between North Energy and Elliptic Laboratories
Can any of the company-specific risk be diversified away by investing in both North Energy and Elliptic Laboratories 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 North Energy and Elliptic Laboratories into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between North Energy ASA and Elliptic Laboratories AS, you can compare the effects of market volatilities on North Energy and Elliptic Laboratories 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 North Energy with a short position of Elliptic Laboratories. Check out your portfolio center. Please also check ongoing floating volatility patterns of North Energy and Elliptic Laboratories.
Diversification Opportunities for North Energy and Elliptic Laboratories
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between North and Elliptic is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding North Energy ASA and Elliptic Laboratories AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elliptic Laboratories and North Energy 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 North Energy ASA are associated (or correlated) with Elliptic Laboratories. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elliptic Laboratories has no effect on the direction of North Energy i.e., North Energy and Elliptic Laboratories go up and down completely randomly.
Pair Corralation between North Energy and Elliptic Laboratories
Assuming the 90 days trading horizon North Energy ASA is expected to generate 0.64 times more return on investment than Elliptic Laboratories. However, North Energy ASA is 1.56 times less risky than Elliptic Laboratories. It trades about 0.18 of its potential returns per unit of risk. Elliptic Laboratories AS is currently generating about -0.23 per unit of risk. If you would invest 240.00 in North Energy ASA on August 28, 2024 and sell it today you would earn a total of 30.00 from holding North Energy ASA or generate 12.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
North Energy ASA vs. Elliptic Laboratories AS
Performance |
| Timeline |
| North Energy ASA |
| Elliptic Laboratories |
North Energy and Elliptic Laboratories Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with North Energy and Elliptic Laboratories
The main advantage of trading using opposite North Energy and Elliptic Laboratories positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if North Energy position performs unexpectedly, Elliptic Laboratories 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 Elliptic Laboratories will offset losses from the drop in Elliptic Laboratories' long position.The idea behind North Energy ASA and Elliptic Laboratories AS 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.| Elliptic Laboratories vs. Elkem ASA | Elliptic Laboratories vs. Vow ASA | Elliptic Laboratories vs. North Energy ASA | Elliptic Laboratories vs. Arcticzymes Technologies ASA |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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