Correlation Between Equinor ASA and Scatec Solar

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

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

Diversification Opportunities for Equinor ASA and Scatec Solar

0.65

Correlation Coefficient

Equinor ASA  Scatec Solar

Poor diversification

The 3 months correlation between Equinor and Scatec is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Equinor ASA and Scatec Solar OL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scatec Solar OL and Equinor 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 Equinor ASA are associated (or correlated) with Scatec Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scatec Solar OL has no effect on the direction of Equinor ASA i.e., Equinor ASA and Scatec Solar go up and down completely randomly.

Pair Corralation between Equinor ASA and Scatec Solar

Assuming the 90 days trading horizon Equinor ASA is expected to generate 2.24 times less return on investment than Scatec Solar. In addition to that, Equinor ASA is 1.34 times more volatile than Scatec Solar OL. It trades about 0.11 of its total potential returns per unit of risk. Scatec Solar OL is currently generating about 0.33 per unit of volatility. If you would invest  7,860  in Scatec Solar OL on April 23, 2025 and sell it today you would earn a total of  2,300  from holding Scatec Solar OL or generate 29.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Equinor ASA  vs.  Scatec Solar OL

Equinor ASA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Equinor ASA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Equinor ASA may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Scatec Solar OL

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Scatec Solar OL are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Scatec Solar displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Equinor ASA and Scatec Solar

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

The idea behind Equinor ASA and Scatec Solar OL 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.