Correlation Between Everfuel and Cambi ASA

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

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

Diversification Opportunities for Everfuel and Cambi ASA

-0.18

Correlation Coefficient

Everfuel  Cambi ASA

Good diversification

The 3 months correlation between Everfuel and Cambi is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Everfuel AS and Cambi ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cambi ASA and Everfuel 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 Everfuel AS are associated (or correlated) with Cambi ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cambi ASA has no effect on the direction of Everfuel i.e., Everfuel and Cambi ASA go up and down completely randomly.

Pair Corralation between Everfuel and Cambi ASA

Assuming the 90 days trading horizon Everfuel AS is expected to generate 0.39 times more return on investment than Cambi ASA. However, Everfuel AS is 2.58 times less risky than Cambi ASA. It trades about 0.04 of its potential returns per unit of risk. Cambi ASA is currently generating about -0.01 per unit of risk. If you would invest  1,270  in Everfuel AS on September 5, 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 Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Everfuel AS  vs.  Cambi ASA

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 recent stock price disarray, may contribute to short-term losses for the investors.

Cambi ASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cambi ASA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Cambi ASA is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Everfuel and Cambi ASA

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

The idea behind Everfuel AS and Cambi ASA 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.