Correlation Between Pf Bakkafrost and Pryme BV

Can any of the company-specific risk be diversified away by investing in both Pf Bakkafrost and Pryme BV 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 Pf Bakkafrost and Pryme BV into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pf Bakkafrost and Pryme BV, you can compare the effects of market volatilities on Pf Bakkafrost and Pryme BV 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 Pf Bakkafrost with a short position of Pryme BV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pf Bakkafrost and Pryme BV.

Diversification Opportunities for Pf Bakkafrost and Pryme BV

-0.64

Correlation Coefficient

Pf Bakkafrost  Pryme BV

Excellent diversification

The 3 months correlation between BAKKA and Pryme is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Pf Bakkafrost and Pryme BV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pryme BV and Pf Bakkafrost 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 Pf Bakkafrost are associated (or correlated) with Pryme BV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pryme BV has no effect on the direction of Pf Bakkafrost i.e., Pf Bakkafrost and Pryme BV go up and down completely randomly.

Pair Corralation between Pf Bakkafrost and Pryme BV

Assuming the 90 days trading horizon Pf Bakkafrost is expected to generate 0.23 times more return on investment than Pryme BV. However, Pf Bakkafrost is 4.34 times less risky than Pryme BV. It trades about 0.07 of its potential returns per unit of risk. Pryme BV is currently generating about -0.13 per unit of risk. If you would invest  57,700  in Pf Bakkafrost on August 31, 2024 and sell it today you would earn a total of  7,600  from holding Pf Bakkafrost or generate 13.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.23%
Values	Daily Returns

Pf Bakkafrost  vs.  Pryme BV

Pf Bakkafrost

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pf Bakkafrost are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Pf Bakkafrost displayed solid returns over the last few months and may actually be approaching a breakup point.

Pryme BV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pryme BV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Pf Bakkafrost and Pryme BV

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

The idea behind Pf Bakkafrost and Pryme BV 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.