Correlation Between Arctic Fish and Grieg Seafood

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

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

Diversification Opportunities for Arctic Fish and Grieg Seafood

0.76

Correlation Coefficient

Arctic Fish  Grieg Seafood

Poor diversification

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

Pair Corralation between Arctic Fish and Grieg Seafood

Assuming the 90 days trading horizon Arctic Fish Holding is expected to generate 1.87 times more return on investment than Grieg Seafood. However, Arctic Fish is 1.87 times more volatile than Grieg Seafood ASA. It trades about 0.2 of its potential returns per unit of risk. Grieg Seafood ASA is currently generating about 0.04 per unit of risk. If you would invest  4,860  in Arctic Fish Holding on September 3, 2024 and sell it today you would earn a total of  2,240  from holding Arctic Fish Holding or generate 46.09% return on investment over 90 days.

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

Arctic Fish Holding  vs.  Grieg Seafood ASA

Arctic Fish Holding

Risk-Adjusted Performance

12 of 100

Good

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

Grieg Seafood ASA

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Grieg Seafood ASA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting technical and fundamental indicators, Grieg Seafood disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Arctic Fish and Grieg Seafood

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

The idea behind Arctic Fish Holding and Grieg 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.