Correlation Between Var Energi and Bergen Carbon

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

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

Diversification Opportunities for Var Energi and Bergen Carbon

0.88

Correlation Coefficient

Var Energi  Bergen Carbon

Very poor diversification

The 3 months correlation between Var and Bergen is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Var Energi ASA and Bergen Carbon Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bergen Carbon Solutions and Var Energi 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 Var Energi ASA are associated (or correlated) with Bergen Carbon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bergen Carbon Solutions has no effect on the direction of Var Energi i.e., Var Energi and Bergen Carbon go up and down completely randomly.

Pair Corralation between Var Energi and Bergen Carbon

Assuming the 90 days trading horizon Var Energi is expected to generate 3.44 times less return on investment than Bergen Carbon. But when comparing it to its historical volatility, Var Energi ASA is 4.36 times less risky than Bergen Carbon. It trades about 0.17 of its potential returns per unit of risk. Bergen Carbon Solutions is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  325.00  in Bergen Carbon Solutions on April 23, 2025 and sell it today you would earn a total of  179.00  from holding Bergen Carbon Solutions or generate 55.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Var Energi ASA  vs.  Bergen Carbon Solutions

Var Energi ASA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Var Energi ASA are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating basic indicators, Var Energi disclosed solid returns over the last few months and may actually be approaching a breakup point.

Bergen Carbon Solutions

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bergen Carbon Solutions are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Bergen Carbon disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Var Energi and Bergen Carbon

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

The idea behind Var Energi ASA and Bergen Carbon Solutions 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.