Correlation Between Alfen NV and FREYR Battery

Can any of the company-specific risk be diversified away by investing in both Alfen NV 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 Alfen NV and FREYR Battery into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alfen NV and FREYR Battery SA, you can compare the effects of market volatilities on Alfen NV 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 Alfen NV with a short position of FREYR Battery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alfen NV and FREYR Battery.

Diversification Opportunities for Alfen NV and FREYR Battery

0.0

Correlation Coefficient

Alfen NV  FREYR Battery

Pay attention - limited upside

The 3 months correlation between Alfen and FREYR is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Alfen NV 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 Alfen NV 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 Alfen NV 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 Alfen NV i.e., Alfen NV and FREYR Battery go up and down completely randomly.

Pair Corralation between Alfen NV and FREYR Battery

If you would invest  600.00  in Alfen NV on November 29, 2024 and sell it today you would earn a total of  0.00  from holding Alfen NV or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	93.65%
Values	Daily Returns

Alfen NV  vs.  FREYR Battery SA

Alfen NV

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alfen NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental drivers, Alfen NV is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

FREYR Battery SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days FREYR Battery SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Alfen NV and FREYR Battery

The main advantage of trading using opposite Alfen NV and FREYR Battery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alfen NV 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 Alfen NV 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.

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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.