Correlation Between Austevoll Seafood and Clean Seas

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

Diversification Opportunities for Austevoll Seafood and Clean Seas

0.08

Correlation Coefficient

Austevoll Seafood  Clean Seas

Significant diversification

The 3 months correlation between Austevoll and Clean is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Austevoll Seafood ASA and Clean Seas Seafood in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clean Seas Seafood 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 Clean Seas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clean Seas Seafood has no effect on the direction of Austevoll Seafood i.e., Austevoll Seafood and Clean Seas go up and down completely randomly.

Pair Corralation between Austevoll Seafood and Clean Seas

Assuming the 90 days trading horizon Austevoll Seafood is expected to generate 50.29 times less return on investment than Clean Seas. But when comparing it to its historical volatility, Austevoll Seafood ASA is 3.62 times less risky than Clean Seas. It trades about 0.01 of its potential returns per unit of risk. Clean Seas Seafood is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  85.00  in Clean Seas Seafood on December 30, 2024 and sell it today you would earn a total of  25.00  from holding Clean Seas Seafood or generate 29.41% return on investment over 90 days.

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

Austevoll Seafood ASA  vs.  Clean Seas Seafood

Austevoll Seafood ASA

Risk-Adjusted Performance

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 quite persistent essential indicators, Austevoll Seafood is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Clean Seas Seafood

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Clean Seas Seafood are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Clean Seas disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Austevoll Seafood and Clean Seas

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

The idea behind Austevoll Seafood ASA and Clean Seas 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.