Correlation Between Clean Seas and Andfjord Salmon

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

By analyzing existing cross correlation between Clean Seas Seafood and Andfjord Salmon AS, you can compare the effects of market volatilities on Clean Seas and Andfjord Salmon 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 Clean Seas with a short position of Andfjord Salmon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clean Seas and Andfjord Salmon.

Diversification Opportunities for Clean Seas and Andfjord Salmon

0.31

Correlation Coefficient

Clean Seas  Andfjord Salmon

Weak diversification

The 3 months correlation between Clean and Andfjord is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Clean Seas Seafood and Andfjord Salmon AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Andfjord Salmon AS and Clean Seas 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 Clean Seas Seafood are associated (or correlated) with Andfjord Salmon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Andfjord Salmon AS has no effect on the direction of Clean Seas i.e., Clean Seas and Andfjord Salmon go up and down completely randomly.

Pair Corralation between Clean Seas and Andfjord Salmon

Assuming the 90 days trading horizon Clean Seas Seafood is expected to generate 3.96 times more return on investment than Andfjord Salmon. However, Clean Seas is 3.96 times more volatile than Andfjord Salmon AS. It trades about 0.03 of its potential returns per unit of risk. Andfjord Salmon AS is currently generating about -0.05 per unit of risk. If you would invest  100.00  in Clean Seas Seafood on November 29, 2024 and sell it today you would earn a total of  0.00  from holding Clean Seas Seafood or generate 0.0% return on investment over 90 days.

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

Clean Seas Seafood  vs.  Andfjord Salmon AS

Clean Seas Seafood

Risk-Adjusted Performance

Weak

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

Andfjord Salmon AS

Risk-Adjusted Performance

Very Weak

Over the last 90 days Andfjord Salmon AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Andfjord Salmon is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Clean Seas and Andfjord Salmon

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

The idea behind Clean Seas Seafood and Andfjord Salmon AS 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.