Correlation Between RedFlow and FREYR Battery
Can any of the company-specific risk be diversified away by investing in both RedFlow 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 RedFlow and FREYR Battery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RedFlow Limited and FREYR Battery SA, you can compare the effects of market volatilities on RedFlow 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 RedFlow with a short position of FREYR Battery. Check out your portfolio center. Please also check ongoing floating volatility patterns of RedFlow and FREYR Battery.
Diversification Opportunities for RedFlow and FREYR Battery
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between RedFlow and FREYR is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding RedFlow Limited 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 RedFlow 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 RedFlow Limited 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 RedFlow i.e., RedFlow and FREYR Battery go up and down completely randomly.
Pair Corralation between RedFlow and FREYR Battery
Assuming the 90 days horizon RedFlow Limited is expected to generate 11.74 times more return on investment than FREYR Battery. However, RedFlow is 11.74 times more volatile than FREYR Battery SA. It trades about 0.27 of its potential returns per unit of risk. FREYR Battery SA is currently generating about 0.25 per unit of risk. If you would invest 1.79 in RedFlow Limited on August 29, 2024 and sell it today you would earn a total of 6.01 from holding RedFlow Limited or generate 335.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
RedFlow Limited vs. FREYR Battery SA
Performance |
| Timeline |
| RedFlow Limited |
| FREYR Battery SA |
RedFlow and FREYR Battery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RedFlow and FREYR Battery
The main advantage of trading using opposite RedFlow and FREYR Battery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RedFlow 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.The idea behind RedFlow Limited and FREYR Battery SA 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.| 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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