Correlation Between Plug Power and FREYR Battery
Can any of the company-specific risk be diversified away by investing in both Plug Power 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 Plug Power and FREYR Battery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Plug Power and FREYR Battery SA, you can compare the effects of market volatilities on Plug Power 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 Plug Power with a short position of FREYR Battery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Plug Power and FREYR Battery.
Diversification Opportunities for Plug Power and FREYR Battery
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Plug and FREYR is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Plug Power 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 Plug Power 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 Plug Power 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 Plug Power i.e., Plug Power and FREYR Battery go up and down completely randomly.
Pair Corralation between Plug Power and FREYR Battery
Given the investment horizon of 90 days Plug Power is expected to under-perform the FREYR Battery. But the stock apears to be less risky and, when comparing its historical volatility, Plug Power is 1.57 times less risky than FREYR Battery. The stock trades about -0.05 of its potential returns per unit of risk. The FREYR Battery SA is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 266.00 in FREYR Battery SA on August 24, 2024 and sell it today you would lose (13.00) from holding FREYR Battery SA or give up 4.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Plug Power vs. FREYR Battery SA
Performance |
| Timeline |
| Plug Power |
| FREYR Battery SA |
Plug Power and FREYR Battery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Plug Power and FREYR Battery
The main advantage of trading using opposite Plug Power and FREYR Battery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Plug Power 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.| Plug Power vs. Bloom Energy Corp | Plug Power vs. Microvast Holdings | Plug Power vs. Solid Power | Plug Power vs. CBAK Energy Technology |
| 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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