Correlation Between Clean Seas and Salmon Evolution
Can any of the company-specific risk be diversified away by investing in both Clean Seas 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 Clean Seas and Salmon Evolution 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 Salmon Evolution Holding, you can compare the effects of market volatilities on Clean Seas 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 Clean Seas with a short position of Salmon Evolution. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clean Seas and Salmon Evolution.
Diversification Opportunities for Clean Seas and Salmon Evolution
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Clean and Salmon is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Clean Seas Seafood 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 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 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 Clean Seas i.e., Clean Seas and Salmon Evolution go up and down completely randomly.
Pair Corralation between Clean Seas and Salmon Evolution
Assuming the 90 days trading horizon Clean Seas Seafood is expected to under-perform the Salmon Evolution. In addition to that, Clean Seas is 2.67 times more volatile than Salmon Evolution Holding. It trades about -0.26 of its total potential returns per unit of risk. Salmon Evolution Holding is currently generating about 0.07 per unit of volatility. If you would invest 636.00 in Salmon Evolution Holding on September 6, 2024 and sell it today you would earn a total of 42.00 from holding Salmon Evolution Holding or generate 6.6% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 98.46% |
Values | Daily Returns |
Clean Seas Seafood vs. Salmon Evolution Holding
Performance |
Timeline |
Clean Seas Seafood |
Salmon Evolution Holding |
Clean Seas and Salmon Evolution Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Clean Seas and Salmon Evolution
The main advantage of trading using opposite Clean Seas and Salmon Evolution positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clean Seas 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.Clean Seas vs. SalMar ASA | Clean Seas vs. Austevoll Seafood ASA | Clean Seas vs. Icelandic Salmon As | Clean Seas vs. Salmon Evolution Holding |
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Check out your portfolio center.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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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