Correlation Between North Energy and Eqva ASA
Can any of the company-specific risk be diversified away by investing in both North Energy and Eqva ASA 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 Eqva ASA 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 Eqva ASA, you can compare the effects of market volatilities on North Energy and Eqva ASA 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 Eqva ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of North Energy and Eqva ASA.
Diversification Opportunities for North Energy and Eqva ASA
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between North and Eqva is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding North Energy ASA and Eqva ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eqva ASA 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 Eqva ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eqva ASA has no effect on the direction of North Energy i.e., North Energy and Eqva ASA go up and down completely randomly.
Pair Corralation between North Energy and Eqva ASA
Assuming the 90 days trading horizon North Energy ASA is expected to generate 2.45 times more return on investment than Eqva ASA. However, North Energy is 2.45 times more volatile than Eqva ASA. It trades about 0.04 of its potential returns per unit of risk. Eqva ASA is currently generating about 0.01 per unit of risk. If you would invest 263.00 in North Energy ASA on November 9, 2024 and sell it today you would earn a total of 5.00 from holding North Energy ASA or generate 1.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
North Energy ASA vs. Eqva ASA
Performance |
| Timeline |
| North Energy ASA |
| Eqva ASA |
North Energy and Eqva ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with North Energy and Eqva ASA
The main advantage of trading using opposite North Energy and Eqva ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if North Energy position performs unexpectedly, Eqva ASA 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 Eqva ASA will offset losses from the drop in Eqva ASA's long position.| North Energy vs. Melhus Sparebank | North Energy vs. Sparebank 1 SMN | North Energy vs. Sunndal Sparebank | North Energy 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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