Correlation Between Eqva ASA and North Energy

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

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

Diversification Opportunities for Eqva ASA and North Energy

0.41

Correlation Coefficient

Eqva ASA  North Energy

Very weak diversification

The 3 months correlation between Eqva and North is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Eqva ASA and North Energy ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North Energy ASA and Eqva ASA 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 Eqva ASA are associated (or correlated) with North Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North Energy ASA has no effect on the direction of Eqva ASA i.e., Eqva ASA and North Energy go up and down completely randomly.

Pair Corralation between Eqva ASA and North Energy

Assuming the 90 days trading horizon Eqva ASA is expected to generate 1.23 times more return on investment than North Energy. However, Eqva ASA is 1.23 times more volatile than North Energy ASA. It trades about 0.07 of its potential returns per unit of risk. North Energy ASA is currently generating about 0.02 per unit of risk. If you would invest  488.00  in Eqva ASA on November 29, 2024 and sell it today you would earn a total of  50.00  from holding Eqva ASA or generate 10.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

Eqva ASA  vs.  North Energy ASA

Eqva ASA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Eqva ASA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Eqva ASA may actually be approaching a critical reversion point that can send shares even higher in March 2025.

North Energy ASA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in North Energy ASA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, North Energy is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Eqva ASA and North Energy

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

The idea behind Eqva ASA and North Energy 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.