Correlation Between Eos Energy and FREYR Battery

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

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

Diversification Opportunities for Eos Energy and FREYR Battery

0.58

Correlation Coefficient

Eos Energy  FREYR Battery

Very weak diversification

The 3 months correlation between Eos and FREYR is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Eos Energy Enterprises 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 Eos Energy 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 Eos Energy Enterprises 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 Eos Energy i.e., Eos Energy and FREYR Battery go up and down completely randomly.

Pair Corralation between Eos Energy and FREYR Battery

Given the investment horizon of 90 days Eos Energy Enterprises is expected to generate 1.26 times more return on investment than FREYR Battery. However, Eos Energy is 1.26 times more volatile than FREYR Battery SA. It trades about -0.03 of its potential returns per unit of risk. FREYR Battery SA is currently generating about -0.2 per unit of risk. If you would invest  517.00  in Eos Energy Enterprises on December 27, 2024 and sell it today you would lose (113.00) from holding Eos Energy Enterprises or give up 21.86% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.08%
Values	Daily Returns

Eos Energy Enterprises  vs.  FREYR Battery SA

Eos Energy Enterprises

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eos Energy Enterprises has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Eos Energy and FREYR Battery

The main advantage of trading using opposite Eos Energy and FREYR Battery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eos Energy 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 Eos Energy Enterprises 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..