Correlation Between Dolphin Drilling and Grieg Seafood

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

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

Diversification Opportunities for Dolphin Drilling and Grieg Seafood

0.67

Correlation Coefficient

Dolphin Drilling  Grieg Seafood

Poor diversification

The 3 months correlation between Dolphin and Grieg is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Dolphin Drilling AS and Grieg Seafood ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grieg Seafood ASA and Dolphin Drilling 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 Dolphin Drilling AS are associated (or correlated) with Grieg Seafood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grieg Seafood ASA has no effect on the direction of Dolphin Drilling i.e., Dolphin Drilling and Grieg Seafood go up and down completely randomly.

Pair Corralation between Dolphin Drilling and Grieg Seafood

Assuming the 90 days trading horizon Dolphin Drilling AS is expected to under-perform the Grieg Seafood. In addition to that, Dolphin Drilling is 1.69 times more volatile than Grieg Seafood ASA. It trades about -0.07 of its total potential returns per unit of risk. Grieg Seafood ASA is currently generating about -0.05 per unit of volatility. If you would invest  6,205  in Grieg Seafood ASA on December 30, 2024 and sell it today you would lose (1,200) from holding Grieg Seafood ASA or give up 19.34% of portfolio value over 90 days.

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

Dolphin Drilling AS  vs.  Grieg Seafood ASA

Dolphin Drilling

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dolphin Drilling AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Grieg Seafood ASA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Grieg Seafood ASA 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 technical and fundamental indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Dolphin Drilling and Grieg Seafood

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

The idea behind Dolphin Drilling AS and Grieg 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.

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 Equity Valuation module to check real value of public entities based on technical and fundamental data.