Correlation Between FREYR Battery and Enovix Corp

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

Diversification Opportunities for FREYR Battery and Enovix Corp

0.51
  Correlation Coefficient

Very weak diversification

The 3 months correlation between FREYR and Enovix is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding FREYR Battery SA and Enovix Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enovix Corp 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 Enovix Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enovix Corp has no effect on the direction of FREYR Battery i.e., FREYR Battery and Enovix Corp go up and down completely randomly.

Pair Corralation between FREYR Battery and Enovix Corp

Given the investment horizon of 90 days FREYR Battery SA is expected to under-perform the Enovix Corp. In addition to that, FREYR Battery is 1.45 times more volatile than Enovix Corp. It trades about -0.03 of its total potential returns per unit of risk. Enovix Corp is currently generating about 0.21 per unit of volatility. If you would invest  1,008  in Enovix Corp on March 21, 2024 and sell it today you would earn a total of  238.00  from holding Enovix Corp or generate 23.61% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy95.45%
ValuesDaily Returns

FREYR Battery SA  vs.  Enovix Corp

 Performance 
       Timeline  
FREYR Battery SA 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in FREYR Battery SA are ranked lower than 3 (%) 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.
Enovix Corp 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Enovix Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Enovix Corp showed solid returns over the last few months and may actually be approaching a breakup point.

FREYR Battery and Enovix Corp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with FREYR Battery and Enovix Corp

The main advantage of trading using opposite FREYR Battery and Enovix Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FREYR Battery position performs unexpectedly, Enovix Corp 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 Enovix Corp will offset losses from the drop in Enovix Corp's long position.
The idea behind FREYR Battery SA and Enovix Corp 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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.

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