Correlation Between Grieg Seafood and Cloudberry Clean

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

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

Diversification Opportunities for Grieg Seafood and Cloudberry Clean

-0.16

Correlation Coefficient

Grieg Seafood  Cloudberry Clean

Good diversification

The 3 months correlation between Grieg and Cloudberry is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Grieg Seafood ASA and Cloudberry Clean Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cloudberry Clean Energy and Grieg Seafood 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 Grieg Seafood ASA are associated (or correlated) with Cloudberry Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cloudberry Clean Energy has no effect on the direction of Grieg Seafood i.e., Grieg Seafood and Cloudberry Clean go up and down completely randomly.

Pair Corralation between Grieg Seafood and Cloudberry Clean

Assuming the 90 days trading horizon Grieg Seafood ASA is expected to generate 1.07 times more return on investment than Cloudberry Clean. However, Grieg Seafood is 1.07 times more volatile than Cloudberry Clean Energy. It trades about 0.1 of its potential returns per unit of risk. Cloudberry Clean Energy is currently generating about -0.01 per unit of risk. If you would invest  5,765  in Grieg Seafood ASA on September 17, 2024 and sell it today you would earn a total of  800.00  from holding Grieg Seafood ASA or generate 13.88% return on investment over 90 days.

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

Grieg Seafood ASA  vs.  Cloudberry Clean Energy

Grieg Seafood ASA

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Grieg Seafood ASA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting technical and fundamental indicators, Grieg Seafood disclosed solid returns over the last few months and may actually be approaching a breakup point.

Cloudberry Clean Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cloudberry Clean Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Cloudberry Clean is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Grieg Seafood and Cloudberry Clean

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

The idea behind Grieg Seafood ASA and Cloudberry Clean Energy 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..