Correlation Between Austevoll Seafood and Arctic Fish

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

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

Diversification Opportunities for Austevoll Seafood and Arctic Fish

0.33

Correlation Coefficient

Austevoll Seafood  Arctic Fish

Weak diversification

The 3 months correlation between Austevoll and Arctic is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Austevoll Seafood ASA and Arctic Fish Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arctic Fish Holding and Austevoll Seafood 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 Austevoll Seafood ASA are associated (or correlated) with Arctic Fish. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arctic Fish Holding has no effect on the direction of Austevoll Seafood i.e., Austevoll Seafood and Arctic Fish go up and down completely randomly.

Pair Corralation between Austevoll Seafood and Arctic Fish

Assuming the 90 days trading horizon Austevoll Seafood is expected to generate 4.35 times less return on investment than Arctic Fish. But when comparing it to its historical volatility, Austevoll Seafood ASA is 3.57 times less risky than Arctic Fish. It trades about 0.13 of its potential returns per unit of risk. Arctic Fish Holding is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  4,900  in Arctic Fish Holding on September 3, 2024 and sell it today you would earn a total of  2,200  from holding Arctic Fish Holding or generate 44.9% return on investment over 90 days.

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

Austevoll Seafood ASA  vs.  Arctic Fish Holding

Austevoll Seafood ASA

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Austevoll Seafood ASA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Austevoll Seafood may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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.

Pair Trading with Austevoll Seafood and Arctic Fish

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

The idea behind Austevoll Seafood ASA and Arctic Fish Holding 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.