Correlation Between Horisont Energi and Bergen Carbon

Can any of the company-specific risk be diversified away by investing in both Horisont Energi and Bergen Carbon 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 Horisont Energi and Bergen Carbon into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Horisont Energi AS and Bergen Carbon Solutions, you can compare the effects of market volatilities on Horisont Energi and Bergen Carbon 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 Horisont Energi with a short position of Bergen Carbon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Horisont Energi and Bergen Carbon.

Diversification Opportunities for Horisont Energi and Bergen Carbon

0.73

Correlation Coefficient

Horisont Energi  Bergen Carbon

Poor diversification

The 3 months correlation between Horisont and Bergen is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Horisont Energi AS and Bergen Carbon Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bergen Carbon Solutions and Horisont Energi 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 Horisont Energi AS are associated (or correlated) with Bergen Carbon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bergen Carbon Solutions has no effect on the direction of Horisont Energi i.e., Horisont Energi and Bergen Carbon go up and down completely randomly.

Pair Corralation between Horisont Energi and Bergen Carbon

Assuming the 90 days trading horizon Horisont Energi AS is expected to generate 0.91 times more return on investment than Bergen Carbon. However, Horisont Energi AS is 1.1 times less risky than Bergen Carbon. It trades about -0.1 of its potential returns per unit of risk. Bergen Carbon Solutions is currently generating about -0.12 per unit of risk. If you would invest  362.00  in Horisont Energi AS on September 15, 2024 and sell it today you would lose (93.00) from holding Horisont Energi AS or give up 25.69% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.48%
Values	Daily Returns

Horisont Energi AS  vs.  Bergen Carbon Solutions

Horisont Energi AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Horisont Energi AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Bergen Carbon Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bergen Carbon Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Horisont Energi and Bergen Carbon

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

The idea behind Horisont Energi AS and Bergen Carbon Solutions 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.