Correlation Between Aluminumof China and Austevoll Seafood

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

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

Diversification Opportunities for Aluminumof China and Austevoll Seafood

0.32

Correlation Coefficient

Aluminumof China  Austevoll Seafood

Weak diversification

The 3 months correlation between Aluminumof and Austevoll is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Aluminum of 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 Aluminumof China 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 Aluminum of 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 Aluminumof China i.e., Aluminumof China and Austevoll Seafood go up and down completely randomly.

Pair Corralation between Aluminumof China and Austevoll Seafood

Assuming the 90 days horizon Aluminum of is expected to under-perform the Austevoll Seafood. In addition to that, Aluminumof China is 1.63 times more volatile than Austevoll Seafood ASA. It trades about -0.02 of its total potential returns per unit of risk. Austevoll Seafood ASA is currently generating about 0.0 per unit of volatility. If you would invest  822.00  in Austevoll Seafood ASA on October 11, 2024 and sell it today you would lose (8.00) from holding Austevoll Seafood ASA or give up 0.97% of portfolio value over 90 days.

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

Aluminum of  vs.  Austevoll Seafood ASA

Aluminumof China

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aluminum of has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain 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 ASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Austevoll Seafood ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Austevoll Seafood is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Aluminumof China and Austevoll Seafood

The main advantage of trading using opposite Aluminumof China and Austevoll Seafood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aluminumof China 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 Aluminum of 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.