Correlation Between Hilton Food and Austevoll Seafood

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

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

Diversification Opportunities for Hilton Food and Austevoll Seafood

-0.21

Correlation Coefficient

Hilton Food  Austevoll Seafood

Very good diversification

The 3 months correlation between Hilton and Austevoll is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Hilton Food Group and Austevoll Seafood ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Austevoll Seafood ASA and Hilton Food 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 Hilton Food Group are associated (or correlated) with Austevoll Seafood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Austevoll Seafood ASA has no effect on the direction of Hilton Food i.e., Hilton Food and Austevoll Seafood go up and down completely randomly.

Pair Corralation between Hilton Food and Austevoll Seafood

Assuming the 90 days trading horizon Hilton Food is expected to generate 4.88 times less return on investment than Austevoll Seafood. In addition to that, Hilton Food is 1.06 times more volatile than Austevoll Seafood ASA. It trades about 0.02 of its total potential returns per unit of risk. Austevoll Seafood ASA is currently generating about 0.09 per unit of volatility. If you would invest  8,670  in Austevoll Seafood ASA on September 1, 2024 and sell it today you would earn a total of  1,413  from holding Austevoll Seafood ASA or generate 16.3% return on investment over 90 days.

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

Hilton Food Group  vs.  Austevoll Seafood ASA

Hilton Food Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hilton Food Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Hilton Food is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Austevoll Seafood ASA

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Austevoll Seafood ASA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Austevoll Seafood may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Hilton Food and Austevoll Seafood

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

The idea behind Hilton Food Group and Austevoll 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.