Correlation Between FREYR Battery and Exro Technologies

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

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

Diversification Opportunities for FREYR Battery and Exro Technologies

-0.09

Correlation Coefficient

FREYR Battery  Exro Technologies

Good diversification

The 3 months correlation between FREYR and Exro is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding FREYR Battery SA and Exro Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exro Technologies and FREYR Battery 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 FREYR Battery SA are associated (or correlated) with Exro Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exro Technologies has no effect on the direction of FREYR Battery i.e., FREYR Battery and Exro Technologies go up and down completely randomly.

Pair Corralation between FREYR Battery and Exro Technologies

Given the investment horizon of 90 days FREYR Battery SA is expected to generate 1.54 times more return on investment than Exro Technologies. However, FREYR Battery is 1.54 times more volatile than Exro Technologies. It trades about 0.13 of its potential returns per unit of risk. Exro Technologies is currently generating about -0.11 per unit of risk. If you would invest  216.00  in FREYR Battery SA on October 21, 2024 and sell it today you would earn a total of  33.00  from holding FREYR Battery SA or generate 15.28% return on investment over 90 days.

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

FREYR Battery SA  vs.  Exro Technologies

FREYR Battery SA

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FREYR Battery SA are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, FREYR Battery showed solid returns over the last few months and may actually be approaching a breakup point.

Exro Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Exro Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Exro Technologies is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with FREYR Battery and Exro Technologies

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

The idea behind FREYR Battery SA and Exro Technologies 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.