Correlation Between H FARM and AUSTEVOLL SEAFOOD

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

By analyzing existing cross correlation between H FARM SPA and AUSTEVOLL SEAFOOD, you can compare the effects of market volatilities on H FARM 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 H FARM with a short position of AUSTEVOLL SEAFOOD. Check out your portfolio center. Please also check ongoing floating volatility patterns of H FARM and AUSTEVOLL SEAFOOD.

Diversification Opportunities for H FARM and AUSTEVOLL SEAFOOD

-0.47

Correlation Coefficient

H FARM  AUSTEVOLL SEAFOOD

Very good diversification

The 3 months correlation between 5JQ and AUSTEVOLL is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding H FARM SPA and AUSTEVOLL SEAFOOD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AUSTEVOLL SEAFOOD and H FARM 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 H FARM SPA 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 has no effect on the direction of H FARM i.e., H FARM and AUSTEVOLL SEAFOOD go up and down completely randomly.

Pair Corralation between H FARM and AUSTEVOLL SEAFOOD

Assuming the 90 days horizon H FARM SPA is expected to under-perform the AUSTEVOLL SEAFOOD. But the stock apears to be less risky and, when comparing its historical volatility, H FARM SPA is 1.31 times less risky than AUSTEVOLL SEAFOOD. The stock trades about -0.01 of its potential returns per unit of risk. The AUSTEVOLL SEAFOOD is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  291.00  in AUSTEVOLL SEAFOOD on September 28, 2024 and sell it today you would earn a total of  535.00  from holding AUSTEVOLL SEAFOOD or generate 183.85% return on investment over 90 days.

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

H FARM SPA  vs.  AUSTEVOLL SEAFOOD

H FARM SPA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days H FARM SPA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

AUSTEVOLL SEAFOOD

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AUSTEVOLL SEAFOOD are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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 H FARM and AUSTEVOLL SEAFOOD

The main advantage of trading using opposite H FARM and AUSTEVOLL SEAFOOD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if H FARM 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 H FARM SPA and AUSTEVOLL SEAFOOD 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.