Correlation Between FREYR Battery and Ideal Power

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

Diversification Opportunities for FREYR Battery and Ideal Power

-0.71

Correlation Coefficient

FREYR Battery  Ideal Power

Pay attention - limited upside

The 3 months correlation between FREYR and Ideal is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding FREYR Battery SA and Ideal Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ideal Power 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 Ideal Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ideal Power has no effect on the direction of FREYR Battery i.e., FREYR Battery and Ideal Power go up and down completely randomly.

Pair Corralation between FREYR Battery and Ideal Power

Given the investment horizon of 90 days FREYR Battery SA is expected to under-perform the Ideal Power. In addition to that, FREYR Battery is 1.02 times more volatile than Ideal Power. It trades about -0.16 of its total potential returns per unit of risk. Ideal Power is currently generating about -0.03 per unit of volatility. If you would invest  671.00  in Ideal Power on September 16, 2024 and sell it today you would lose (35.00) from holding Ideal Power or give up 5.22% of portfolio value over 90 days.

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

FREYR Battery SA  vs.  Ideal Power

FREYR Battery SA

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FREYR Battery SA are ranked lower than 9 (%) 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.

Ideal Power

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ideal Power has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with FREYR Battery and Ideal Power

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

The idea behind FREYR Battery SA and Ideal Power 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.