Correlation Between Austevoll Seafood and Ferrexpo PLC

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

Diversification Opportunities for Austevoll Seafood and Ferrexpo PLC

0.34

Correlation Coefficient

Austevoll Seafood  Ferrexpo PLC

Weak diversification

The 3 months correlation between Austevoll and Ferrexpo is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Austevoll Seafood ASA and Ferrexpo PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ferrexpo PLC 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 Ferrexpo PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ferrexpo PLC has no effect on the direction of Austevoll Seafood i.e., Austevoll Seafood and Ferrexpo PLC go up and down completely randomly.

Pair Corralation between Austevoll Seafood and Ferrexpo PLC

Assuming the 90 days trading horizon Austevoll Seafood ASA is expected to under-perform the Ferrexpo PLC. But the stock apears to be less risky and, when comparing its historical volatility, Austevoll Seafood ASA is 5.61 times less risky than Ferrexpo PLC. The stock trades about -0.23 of its potential returns per unit of risk. The Ferrexpo PLC is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  7,960  in Ferrexpo PLC on September 23, 2024 and sell it today you would earn a total of  2,300  from holding Ferrexpo PLC or generate 28.89% return on investment over 90 days.

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

Austevoll Seafood ASA  vs.  Ferrexpo PLC

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.

Ferrexpo PLC

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ferrexpo PLC are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Ferrexpo PLC unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Austevoll Seafood and Ferrexpo PLC

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

The idea behind Austevoll Seafood ASA and Ferrexpo PLC 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.