Correlation Between Grieg Seafood and Dotdigital Group

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

By analyzing existing cross correlation between Grieg Seafood and Dotdigital Group Plc, you can compare the effects of market volatilities on Grieg Seafood and Dotdigital Group 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 Grieg Seafood with a short position of Dotdigital Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grieg Seafood and Dotdigital Group.

Diversification Opportunities for Grieg Seafood and Dotdigital Group

0.17

Correlation Coefficient

Grieg Seafood  Dotdigital Group

Average diversification

The 3 months correlation between Grieg and Dotdigital is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Grieg Seafood and Dotdigital Group Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dotdigital Group Plc and Grieg 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 Grieg Seafood are associated (or correlated) with Dotdigital Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dotdigital Group Plc has no effect on the direction of Grieg Seafood i.e., Grieg Seafood and Dotdigital Group go up and down completely randomly.

Pair Corralation between Grieg Seafood and Dotdigital Group

Assuming the 90 days trading horizon Grieg Seafood is expected to generate 0.98 times more return on investment than Dotdigital Group. However, Grieg Seafood is 1.02 times less risky than Dotdigital Group. It trades about 0.15 of its potential returns per unit of risk. Dotdigital Group Plc is currently generating about 0.05 per unit of risk. If you would invest  4,795  in Grieg Seafood on September 3, 2024 and sell it today you would earn a total of  1,285  from holding Grieg Seafood or generate 26.8% return on investment over 90 days.

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

Grieg Seafood  vs.  Dotdigital Group Plc

Grieg Seafood

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Grieg Seafood are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Grieg Seafood unveiled solid returns over the last few months and may actually be approaching a breakup point.

Dotdigital Group Plc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dotdigital Group Plc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Dotdigital Group may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Grieg Seafood and Dotdigital Group

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

The idea behind Grieg Seafood and Dotdigital Group 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.