Correlation Between Austevoll Seafood and Summit Materials

Can any of the company-specific risk be diversified away by investing in both Austevoll Seafood and Summit Materials 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 Summit Materials 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 Summit Materials Cl, you can compare the effects of market volatilities on Austevoll Seafood and Summit Materials 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 Summit Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Austevoll Seafood and Summit Materials.

Diversification Opportunities for Austevoll Seafood and Summit Materials

0.51

Correlation Coefficient

Austevoll Seafood  Summit Materials

Very weak diversification

The 3 months correlation between Austevoll and Summit is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Austevoll Seafood ASA and Summit Materials Cl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Materials 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 Summit Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Materials has no effect on the direction of Austevoll Seafood i.e., Austevoll Seafood and Summit Materials go up and down completely randomly.

Pair Corralation between Austevoll Seafood and Summit Materials

Assuming the 90 days trading horizon Austevoll Seafood ASA is expected to generate 3.99 times more return on investment than Summit Materials. However, Austevoll Seafood is 3.99 times more volatile than Summit Materials Cl. It trades about 0.08 of its potential returns per unit of risk. Summit Materials Cl is currently generating about 0.17 per unit of risk. If you would invest  10,083  in Austevoll Seafood ASA on November 29, 2024 and sell it today you would earn a total of  642.00  from holding Austevoll Seafood ASA or generate 6.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	77.05%
Values	Daily Returns

Austevoll Seafood ASA  vs.  Summit Materials Cl

Austevoll Seafood ASA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Austevoll Seafood ASA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Austevoll Seafood may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Summit Materials

Risk-Adjusted Performance

Good

Over the last 90 days Summit Materials Cl has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Summit Materials 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 Summit Materials

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

The idea behind Austevoll Seafood ASA and Summit Materials Cl 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.