Correlation Between Aker Carbon and Everfuel

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

By analyzing existing cross correlation between Aker Carbon Capture and Everfuel AS, you can compare the effects of market volatilities on Aker Carbon and Everfuel 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 Aker Carbon with a short position of Everfuel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aker Carbon and Everfuel.

Diversification Opportunities for Aker Carbon and Everfuel

0.2

Correlation Coefficient

Aker Carbon  Everfuel

Modest diversification

The 3 months correlation between Aker and Everfuel is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Aker Carbon Capture and Everfuel AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Everfuel AS and Aker Carbon 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 Aker Carbon Capture are associated (or correlated) with Everfuel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Everfuel AS has no effect on the direction of Aker Carbon i.e., Aker Carbon and Everfuel go up and down completely randomly.

Pair Corralation between Aker Carbon and Everfuel

Assuming the 90 days trading horizon Aker Carbon Capture is expected to under-perform the Everfuel. In addition to that, Aker Carbon is 2.37 times more volatile than Everfuel AS. It trades about -0.01 of its total potential returns per unit of risk. Everfuel AS is currently generating about 0.04 per unit of volatility. If you would invest  1,270  in Everfuel AS on September 2, 2024 and sell it today you would earn a total of  24.00  from holding Everfuel AS or generate 1.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Aker Carbon Capture  vs.  Everfuel AS

Aker Carbon Capture

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aker Carbon Capture has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Aker Carbon is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Everfuel AS

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Everfuel AS are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Everfuel is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Aker Carbon and Everfuel

The main advantage of trading using opposite Aker Carbon and Everfuel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aker Carbon position performs unexpectedly, Everfuel 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 Everfuel will offset losses from the drop in Everfuel's long position.

The idea behind Aker Carbon Capture and Everfuel 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.

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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.