Correlation Between Eneos Holdings and Equinor ASA

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

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

Diversification Opportunities for Eneos Holdings and Equinor ASA

0.49

Correlation Coefficient

Eneos Holdings  Equinor ASA

Very weak diversification

The 3 months correlation between Eneos and Equinor is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Eneos Holdings ADR and Equinor ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equinor ASA and Eneos Holdings 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 Eneos Holdings ADR are associated (or correlated) with Equinor ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equinor ASA has no effect on the direction of Eneos Holdings i.e., Eneos Holdings and Equinor ASA go up and down completely randomly.

Pair Corralation between Eneos Holdings and Equinor ASA

Assuming the 90 days horizon Eneos Holdings ADR is expected to generate 2.27 times more return on investment than Equinor ASA. However, Eneos Holdings is 2.27 times more volatile than Equinor ASA. It trades about 0.03 of its potential returns per unit of risk. Equinor ASA is currently generating about 0.0 per unit of risk. If you would invest  1,056  in Eneos Holdings ADR on September 4, 2024 and sell it today you would lose (3.00) from holding Eneos Holdings ADR or give up 0.28% of portfolio value over 90 days.

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

Eneos Holdings ADR  vs.  Equinor ASA

Eneos Holdings ADR

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eneos Holdings ADR are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, Eneos Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Equinor ASA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Eneos Holdings and Equinor ASA

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

The idea behind Eneos Holdings ADR and Equinor 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.

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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.