Correlation Between Austevoll Seafood and British American

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

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

Diversification Opportunities for Austevoll Seafood and British American

0.36

Correlation Coefficient

Austevoll Seafood  British American

Weak diversification

The 3 months correlation between Austevoll and British is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Austevoll Seafood ASA and British American Tobacco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on British American Tobacco and Austevoll Seafood 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 Austevoll Seafood ASA are associated (or correlated) with British American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of British American Tobacco has no effect on the direction of Austevoll Seafood i.e., Austevoll Seafood and British American go up and down completely randomly.

Pair Corralation between Austevoll Seafood and British American

Assuming the 90 days trading horizon Austevoll Seafood is expected to generate 1.7 times less return on investment than British American. But when comparing it to its historical volatility, Austevoll Seafood ASA is 1.12 times less risky than British American. It trades about 0.07 of its potential returns per unit of risk. British American Tobacco is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  2,984  in British American Tobacco on September 23, 2024 and sell it today you would earn a total of  626.00  from holding British American Tobacco or generate 20.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.23%
Values	Daily Returns

Austevoll Seafood ASA  vs.  British American Tobacco

Austevoll Seafood ASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Austevoll Seafood ASA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Austevoll Seafood is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

British American Tobacco

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days British American Tobacco has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, British American is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Austevoll Seafood and British American

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

The idea behind Austevoll Seafood ASA and British American Tobacco 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.