Correlation Between Entra ASA and Mowi ASA

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

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

Diversification Opportunities for Entra ASA and Mowi ASA

0.44

Correlation Coefficient

Entra ASA  Mowi ASA

Very weak diversification

The 3 months correlation between Entra and Mowi is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Entra ASA and Mowi ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mowi ASA and Entra ASA 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 Entra ASA are associated (or correlated) with Mowi ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mowi ASA has no effect on the direction of Entra ASA i.e., Entra ASA and Mowi ASA go up and down completely randomly.

Pair Corralation between Entra ASA and Mowi ASA

Assuming the 90 days trading horizon Entra ASA is expected to generate 1.15 times more return on investment than Mowi ASA. However, Entra ASA is 1.15 times more volatile than Mowi ASA. It trades about 0.06 of its potential returns per unit of risk. Mowi ASA is currently generating about 0.01 per unit of risk. If you would invest  11,560  in Entra ASA on December 30, 2024 and sell it today you would earn a total of  680.00  from holding Entra ASA or generate 5.88% return on investment over 90 days.

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

Entra ASA  vs.  Mowi ASA

Entra ASA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Entra ASA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Entra ASA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Mowi ASA

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Entra ASA and Mowi ASA

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

The idea behind Entra ASA and Mowi 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.