Correlation Between Pf Bakkafrost and Salmon Evolution

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

By analyzing existing cross correlation between Pf Bakkafrost and Salmon Evolution Holding, you can compare the effects of market volatilities on Pf Bakkafrost and Salmon Evolution 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 Salmon Evolution. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pf Bakkafrost and Salmon Evolution.

Diversification Opportunities for Pf Bakkafrost and Salmon Evolution

0.13

Correlation Coefficient

Pf Bakkafrost  Salmon Evolution

Average diversification

The 3 months correlation between BAKKA and Salmon is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Pf Bakkafrost and Salmon Evolution Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salmon Evolution Holding 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 Salmon Evolution. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salmon Evolution Holding has no effect on the direction of Pf Bakkafrost i.e., Pf Bakkafrost and Salmon Evolution go up and down completely randomly.

Pair Corralation between Pf Bakkafrost and Salmon Evolution

Assuming the 90 days trading horizon Pf Bakkafrost is expected to generate 1.12 times more return on investment than Salmon Evolution. However, Pf Bakkafrost is 1.12 times more volatile than Salmon Evolution Holding. It trades about 0.14 of its potential returns per unit of risk. Salmon Evolution Holding is currently generating about 0.04 per unit of risk. If you would invest  56,700  in Pf Bakkafrost on September 3, 2024 and sell it today you would earn a total of  8,550  from holding Pf Bakkafrost or generate 15.08% return on investment over 90 days.

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

Pf Bakkafrost  vs.  Salmon Evolution Holding

Pf Bakkafrost

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pf Bakkafrost are ranked lower than 10 (%) 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.

Salmon Evolution Holding

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Salmon Evolution Holding are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Salmon Evolution is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Pf Bakkafrost and Salmon Evolution

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

The idea behind Pf Bakkafrost and Salmon Evolution 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.