Correlation Between Cars and Austevoll Seafood

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

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

Diversification Opportunities for Cars and Austevoll Seafood

0.76

Correlation Coefficient

Cars  Austevoll Seafood

Poor diversification

The 3 months correlation between Cars and Austevoll is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Cars Inc and Austevoll Seafood ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Austevoll Seafood ASA and Cars 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 Cars Inc are associated (or correlated) with Austevoll Seafood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Austevoll Seafood ASA has no effect on the direction of Cars i.e., Cars and Austevoll Seafood go up and down completely randomly.

Pair Corralation between Cars and Austevoll Seafood

Assuming the 90 days trading horizon Cars Inc is expected to under-perform the Austevoll Seafood. In addition to that, Cars is 3.38 times more volatile than Austevoll Seafood ASA. It trades about -0.28 of its total potential returns per unit of risk. Austevoll Seafood ASA is currently generating about 0.07 per unit of volatility. If you would invest  10,094  in Austevoll Seafood ASA on December 1, 2024 and sell it today you would earn a total of  561.00  from holding Austevoll Seafood ASA or generate 5.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	51.61%
Values	Daily Returns

Cars Inc  vs.  Austevoll Seafood ASA

Cars Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cars Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Austevoll Seafood ASA

Risk-Adjusted Performance

Modest

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 current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Cars and Austevoll Seafood

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

The idea behind Cars Inc and Austevoll Seafood ASA 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.