Correlation Between Clean Seas and Standard Supply

Can any of the company-specific risk be diversified away by investing in both Clean Seas and Standard Supply 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 Standard Supply 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 Standard Supply AS, you can compare the effects of market volatilities on Clean Seas and Standard Supply 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 Standard Supply. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clean Seas and Standard Supply.

Diversification Opportunities for Clean Seas and Standard Supply

0.78

Correlation Coefficient

Clean Seas  Standard Supply

Poor diversification

The 3 months correlation between Clean and Standard is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Clean Seas Seafood and Standard Supply AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Standard Supply 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 Standard Supply. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Standard Supply AS has no effect on the direction of Clean Seas i.e., Clean Seas and Standard Supply go up and down completely randomly.

Pair Corralation between Clean Seas and Standard Supply

Assuming the 90 days trading horizon Clean Seas Seafood is expected to generate 0.36 times more return on investment than Standard Supply. However, Clean Seas Seafood is 2.74 times less risky than Standard Supply. It trades about -0.26 of its potential returns per unit of risk. Standard Supply AS is currently generating about -0.12 per unit of risk. If you would invest  210.00  in Clean Seas Seafood on September 17, 2024 and sell it today you would lose (110.00) from holding Clean Seas Seafood or give up 52.38% of portfolio value over 90 days.

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

Clean Seas Seafood  vs.  Standard Supply AS

Clean Seas Seafood

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Clean Seas Seafood has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Standard Supply AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Standard Supply AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Clean Seas and Standard Supply

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

The idea behind Clean Seas Seafood and Standard Supply 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.