Correlation Between Var Energi and Nordic Aqua

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

Diversification Opportunities for Var Energi and Nordic Aqua

-0.73

Correlation Coefficient

Var Energi  Nordic Aqua

Pay attention - limited upside

The 3 months correlation between Var and Nordic is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Var Energi ASA and Nordic Aqua Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordic Aqua Partners 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 Nordic Aqua. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordic Aqua Partners has no effect on the direction of Var Energi i.e., Var Energi and Nordic Aqua go up and down completely randomly.

Pair Corralation between Var Energi and Nordic Aqua

Assuming the 90 days trading horizon Var Energi ASA is expected to generate 0.84 times more return on investment than Nordic Aqua. However, Var Energi ASA is 1.19 times less risky than Nordic Aqua. It trades about 0.17 of its potential returns per unit of risk. Nordic Aqua Partners is currently generating about -0.05 per unit of risk. If you would invest  2,869  in Var Energi ASA on April 24, 2025 and sell it today you would earn a total of  508.00  from holding Var Energi ASA or generate 17.71% return on investment over 90 days.

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

Var Energi ASA  vs.  Nordic Aqua Partners

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.

Nordic Aqua Partners

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nordic Aqua Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's essential indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Var Energi and Nordic Aqua

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

The idea behind Var Energi ASA and Nordic Aqua Partners 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.