Correlation Between Advent Technologies and Energy Vault

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

By analyzing existing cross correlation between Advent Technologies Holdings and Energy Vault Holdings, you can compare the effects of market volatilities on Advent Technologies and Energy Vault 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 Advent Technologies with a short position of Energy Vault. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advent Technologies and Energy Vault.

Diversification Opportunities for Advent Technologies and Energy Vault

0.43

Correlation Coefficient

Advent Technologies  Energy Vault

Very weak diversification

The 3 months correlation between Advent and Energy is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Advent Technologies Holdings and Energy Vault Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy Vault Holdings and Advent Technologies 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 Advent Technologies Holdings are associated (or correlated) with Energy Vault. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy Vault Holdings has no effect on the direction of Advent Technologies i.e., Advent Technologies and Energy Vault go up and down completely randomly.

Pair Corralation between Advent Technologies and Energy Vault

Considering the 90-day investment horizon Advent Technologies is expected to generate 1.2 times less return on investment than Energy Vault. In addition to that, Advent Technologies is 1.36 times more volatile than Energy Vault Holdings. It trades about 0.02 of its total potential returns per unit of risk. Energy Vault Holdings is currently generating about 0.03 per unit of volatility. If you would invest  238.00  in Energy Vault Holdings on September 2, 2024 and sell it today you would lose (32.00) from holding Energy Vault Holdings or give up 13.45% of portfolio value over 90 days.

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

Advent Technologies Holdings  vs.  Energy Vault Holdings

Advent Technologies

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Advent Technologies Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Advent Technologies displayed solid returns over the last few months and may actually be approaching a breakup point.

Energy Vault Holdings

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Energy Vault Holdings are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain technical and fundamental indicators, Energy Vault showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Advent Technologies and Energy Vault

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

The idea behind Advent Technologies Holdings and Energy Vault Holdings 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 Global Correlations module to find global opportunities by holding instruments from different markets.