Correlation Between Sibanye Stillwater and Mowi ASA

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

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

Diversification Opportunities for Sibanye Stillwater and Mowi ASA

-0.44

Correlation Coefficient

Sibanye Stillwater  Mowi ASA

Very good diversification

The 3 months correlation between Sibanye and Mowi is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Sibanye Stillwater Limited and Mowi ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mowi ASA and Sibanye Stillwater 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 Sibanye Stillwater Limited are associated (or correlated) with Mowi ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mowi ASA has no effect on the direction of Sibanye Stillwater i.e., Sibanye Stillwater and Mowi ASA go up and down completely randomly.

Pair Corralation between Sibanye Stillwater and Mowi ASA

Assuming the 90 days horizon Sibanye Stillwater Limited is expected to under-perform the Mowi ASA. In addition to that, Sibanye Stillwater is 2.1 times more volatile than Mowi ASA. It trades about -0.02 of its total potential returns per unit of risk. Mowi ASA is currently generating about 0.11 per unit of volatility. If you would invest  1,267  in Mowi ASA on October 4, 2024 and sell it today you would earn a total of  374.00  from holding Mowi ASA or generate 29.52% return on investment over 90 days.

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

Sibanye Stillwater Limited  vs.  Mowi ASA

Sibanye Stillwater

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sibanye Stillwater Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Mowi ASA

Risk-Adjusted Performance

6 of 100

Modest

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

Pair Trading with Sibanye Stillwater and Mowi ASA

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

The idea behind Sibanye Stillwater Limited and Mowi 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.