Correlation Between FREYR Battery and FuelCell Energy

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Can any of the company-specific risk be diversified away by investing in both FREYR Battery and FuelCell 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 FREYR Battery and FuelCell Energy 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 FuelCell Energy, you can compare the effects of market volatilities on FREYR Battery and FuelCell 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 FREYR Battery with a short position of FuelCell Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of FREYR Battery and FuelCell Energy.

Diversification Opportunities for FREYR Battery and FuelCell Energy

0.34
  Correlation Coefficient

Weak diversification

The 3 months correlation between FREYR and FuelCell is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding FREYR Battery SA and FuelCell Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FuelCell Energy 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 FuelCell Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FuelCell Energy has no effect on the direction of FREYR Battery i.e., FREYR Battery and FuelCell Energy go up and down completely randomly.

Pair Corralation between FREYR Battery and FuelCell Energy

Given the investment horizon of 90 days FREYR Battery SA is expected to generate 1.15 times more return on investment than FuelCell Energy. However, FREYR Battery is 1.15 times more volatile than FuelCell Energy. It trades about -0.04 of its potential returns per unit of risk. FuelCell Energy is currently generating about -0.17 per unit of risk. If you would invest  207.00  in FREYR Battery SA on November 28, 2024 and sell it today you would lose (48.00) from holding FREYR Battery SA or give up 23.19% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

FREYR Battery SA  vs.  FuelCell Energy

 Performance 
       Timeline  
FREYR Battery SA 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
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 March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
FuelCell Energy 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days FuelCell Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in March 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

FREYR Battery and FuelCell Energy Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with FREYR Battery and FuelCell Energy

The main advantage of trading using opposite FREYR Battery and FuelCell Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FREYR Battery position performs unexpectedly, FuelCell 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 FuelCell Energy will offset losses from the drop in FuelCell Energy's long position.
The idea behind FREYR Battery SA and FuelCell Energy 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.

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