Correlation Between Beazer Homes and Austevoll Seafood

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

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

Diversification Opportunities for Beazer Homes and Austevoll Seafood

0.46

Correlation Coefficient

Beazer Homes  Austevoll Seafood

Very weak diversification

The 3 months correlation between Beazer and Austevoll is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Beazer Homes USA and Austevoll Seafood ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Austevoll Seafood ASA and Beazer Homes 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 Beazer Homes USA are associated (or correlated) with Austevoll Seafood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Austevoll Seafood ASA has no effect on the direction of Beazer Homes i.e., Beazer Homes and Austevoll Seafood go up and down completely randomly.

Pair Corralation between Beazer Homes and Austevoll Seafood

Assuming the 90 days trading horizon Beazer Homes is expected to generate 164.65 times less return on investment than Austevoll Seafood. But when comparing it to its historical volatility, Beazer Homes USA is 2.4 times less risky than Austevoll Seafood. It trades about 0.0 of its potential returns per unit of risk. Austevoll Seafood ASA is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  319.00  in Austevoll Seafood ASA on October 9, 2024 and sell it today you would earn a total of  524.00  from holding Austevoll Seafood ASA or generate 164.26% return on investment over 90 days.

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

Beazer Homes USA  vs.  Austevoll Seafood ASA

Beazer Homes USA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Beazer Homes USA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Austevoll Seafood ASA

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Austevoll Seafood ASA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Austevoll Seafood is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Beazer Homes and Austevoll Seafood

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

The idea behind Beazer Homes USA and Austevoll Seafood ASA 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.