Correlation Between Ensurge Micropower and Nordic Aqua

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

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

Diversification Opportunities for Ensurge Micropower and Nordic Aqua

0.72

Correlation Coefficient

Ensurge Micropower  Nordic Aqua

Poor diversification

The 3 months correlation between Ensurge and Nordic is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Ensurge Micropower ASA and Nordic Aqua Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordic Aqua Partners and Ensurge Micropower 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 Ensurge Micropower ASA are associated (or correlated) with Nordic Aqua. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordic Aqua Partners has no effect on the direction of Ensurge Micropower i.e., Ensurge Micropower and Nordic Aqua go up and down completely randomly.

Pair Corralation between Ensurge Micropower and Nordic Aqua

Assuming the 90 days trading horizon Ensurge Micropower ASA is expected to generate 2.83 times more return on investment than Nordic Aqua. However, Ensurge Micropower is 2.83 times more volatile than Nordic Aqua Partners. It trades about 0.04 of its potential returns per unit of risk. Nordic Aqua Partners is currently generating about 0.01 per unit of risk. If you would invest  65.00  in Ensurge Micropower ASA on September 4, 2024 and sell it today you would earn a total of  17.00  from holding Ensurge Micropower ASA or generate 26.15% return on investment over 90 days.

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

Ensurge Micropower ASA  vs.  Nordic Aqua Partners

Ensurge Micropower ASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ensurge Micropower ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Nordic Aqua Partners

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nordic Aqua Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Ensurge Micropower and Nordic Aqua

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

The idea behind Ensurge Micropower ASA and Nordic Aqua Partners 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.