Correlation Between Scatec Solar and Eqva ASA

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

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

Diversification Opportunities for Scatec Solar and Eqva ASA

0.0

Correlation Coefficient

Scatec Solar  Eqva ASA

Pay attention - limited upside

The 3 months correlation between Scatec and Eqva is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Scatec Solar OL and Eqva ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eqva ASA and Scatec Solar 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 Scatec Solar OL are associated (or correlated) with Eqva ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eqva ASA has no effect on the direction of Scatec Solar i.e., Scatec Solar and Eqva ASA go up and down completely randomly.

Pair Corralation between Scatec Solar and Eqva ASA

Assuming the 90 days trading horizon Scatec Solar is expected to generate 3.7 times less return on investment than Eqva ASA. But when comparing it to its historical volatility, Scatec Solar OL is 1.34 times less risky than Eqva ASA. It trades about 0.02 of its potential returns per unit of risk. Eqva ASA is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  476.00  in Eqva ASA on December 30, 2024 and sell it today you would earn a total of  40.00  from holding Eqva ASA or generate 8.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Scatec Solar OL  vs.  Eqva ASA

Scatec Solar OL

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Scatec Solar OL are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Scatec Solar is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Eqva ASA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Eqva ASA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Eqva ASA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Scatec Solar and Eqva ASA

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

The idea behind Scatec Solar OL and Eqva 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.

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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.