Correlation Between Icelandic Salmon and Grieg Seafood

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

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

Diversification Opportunities for Icelandic Salmon and Grieg Seafood

0.06

Correlation Coefficient

Icelandic Salmon  Grieg Seafood

Significant diversification

The 3 months correlation between Icelandic and Grieg is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Icelandic Salmon 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 Icelandic Salmon 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 Icelandic Salmon 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 Icelandic Salmon i.e., Icelandic Salmon and Grieg Seafood go up and down completely randomly.

Pair Corralation between Icelandic Salmon and Grieg Seafood

Assuming the 90 days trading horizon Icelandic Salmon As is expected to generate 0.25 times more return on investment than Grieg Seafood. However, Icelandic Salmon As is 3.98 times less risky than Grieg Seafood. It trades about -0.12 of its potential returns per unit of risk. Grieg Seafood ASA is currently generating about -0.07 per unit of risk. If you would invest  12,000  in Icelandic Salmon As on December 1, 2024 and sell it today you would lose (1,000.00) from holding Icelandic Salmon As or give up 8.33% of portfolio value over 90 days.

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

Icelandic Salmon As  vs.  Grieg Seafood ASA

Icelandic Salmon

Risk-Adjusted Performance

Very Weak

Over the last 90 days Icelandic Salmon As has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains 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 Icelandic Salmon and Grieg Seafood

The main advantage of trading using opposite Icelandic Salmon and Grieg Seafood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Icelandic Salmon 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 Icelandic Salmon 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.

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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.