Correlation Between Austevoll Seafood and Awilco Drilling

Can any of the company-specific risk be diversified away by investing in both Austevoll Seafood and Awilco Drilling 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 Awilco Drilling 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 Awilco Drilling PLC, you can compare the effects of market volatilities on Austevoll Seafood and Awilco Drilling 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 Awilco Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Austevoll Seafood and Awilco Drilling.

Diversification Opportunities for Austevoll Seafood and Awilco Drilling

0.34

Correlation Coefficient

Austevoll Seafood  Awilco Drilling

Weak diversification

The 3 months correlation between Austevoll and Awilco is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Austevoll Seafood ASA and Awilco Drilling PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Awilco Drilling PLC 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 Awilco Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Awilco Drilling PLC has no effect on the direction of Austevoll Seafood i.e., Austevoll Seafood and Awilco Drilling go up and down completely randomly.

Pair Corralation between Austevoll Seafood and Awilco Drilling

Assuming the 90 days trading horizon Austevoll Seafood is expected to generate 1.18 times less return on investment than Awilco Drilling. But when comparing it to its historical volatility, Austevoll Seafood ASA is 3.45 times less risky than Awilco Drilling. It trades about 0.1 of its potential returns per unit of risk. Awilco Drilling PLC is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,210  in Awilco Drilling PLC on October 27, 2024 and sell it today you would earn a total of  80.00  from holding Awilco Drilling PLC or generate 3.62% 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.  Awilco Drilling PLC

Austevoll Seafood ASA

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Austevoll Seafood ASA are ranked lower than 8 (%) 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 February 2025.

Awilco Drilling PLC

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Awilco Drilling PLC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Awilco Drilling may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Austevoll Seafood and Awilco Drilling

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

The idea behind Austevoll Seafood ASA and Awilco Drilling PLC 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.