Correlation Between NEP Old and Alternus Energy

Can any of the company-specific risk be diversified away by investing in both NEP Old and Alternus 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 NEP Old and Alternus Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NEP Old and Alternus Energy Group, you can compare the effects of market volatilities on NEP Old and Alternus 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 NEP Old with a short position of Alternus Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEP Old and Alternus Energy.

Diversification Opportunities for NEP Old and Alternus Energy

0.26

Correlation Coefficient

NEP Old  Alternus Energy

Modest diversification

The 3 months correlation between NEP and Alternus is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding NEP Old and Alternus Energy Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alternus Energy Group and NEP Old 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 NEP Old are associated (or correlated) with Alternus Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alternus Energy Group has no effect on the direction of NEP Old i.e., NEP Old and Alternus Energy go up and down completely randomly.

Pair Corralation between NEP Old and Alternus Energy

Considering the 90-day investment horizon NEP Old is expected to under-perform the Alternus Energy. But the stock apears to be less risky and, when comparing its historical volatility, NEP Old is 1.87 times less risky than Alternus Energy. The stock trades about -0.33 of its potential returns per unit of risk. The Alternus Energy Group is currently generating about -0.15 of returns per unit of risk over similar time horizon. If you would invest  52.00  in Alternus Energy Group on December 29, 2024 and sell it today you would lose (47.00) from holding Alternus Energy Group or give up 90.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	37.7%
Values	Daily Returns

NEP Old  vs.  Alternus Energy Group

NEP Old

Risk-Adjusted Performance

Very Weak

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

Alternus Energy Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alternus Energy Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with NEP Old and Alternus Energy

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

The idea behind NEP Old and Alternus Energy Group 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.