Correlation Between Cambi ASA and Everfuel

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

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

Diversification Opportunities for Cambi ASA and Everfuel

-0.13

Correlation Coefficient

Cambi ASA  Everfuel

Good diversification

The 3 months correlation between Cambi and Everfuel is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Cambi ASA and Everfuel AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Everfuel AS and Cambi ASA 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 Cambi ASA are associated (or correlated) with Everfuel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Everfuel AS has no effect on the direction of Cambi ASA i.e., Cambi ASA and Everfuel go up and down completely randomly.

Pair Corralation between Cambi ASA and Everfuel

Assuming the 90 days trading horizon Cambi ASA is expected to generate 0.66 times more return on investment than Everfuel. However, Cambi ASA is 1.52 times less risky than Everfuel. It trades about 0.08 of its potential returns per unit of risk. Everfuel AS is currently generating about -0.02 per unit of risk. If you would invest  460.00  in Cambi ASA on September 4, 2024 and sell it today you would earn a total of  950.00  from holding Cambi ASA or generate 206.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Cambi ASA  vs.  Everfuel AS

Cambi ASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cambi ASA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Cambi ASA is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Everfuel AS

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Everfuel AS are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Everfuel is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Cambi ASA and Everfuel

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

The idea behind Cambi ASA and Everfuel AS 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.