Correlation Between Lindsell Train and Austevoll Seafood

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

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

Diversification Opportunities for Lindsell Train and Austevoll Seafood

0.83

Correlation Coefficient

Lindsell Train  Austevoll Seafood

Very poor diversification

The 3 months correlation between Lindsell and Austevoll is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Lindsell Train Investment 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 Lindsell Train 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 Lindsell Train Investment 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 Lindsell Train i.e., Lindsell Train and Austevoll Seafood go up and down completely randomly.

Pair Corralation between Lindsell Train and Austevoll Seafood

Assuming the 90 days trading horizon Lindsell Train is expected to generate 1.11 times less return on investment than Austevoll Seafood. But when comparing it to its historical volatility, Lindsell Train Investment is 1.07 times less risky than Austevoll Seafood. It trades about 0.06 of its potential returns per unit of risk. Austevoll Seafood ASA is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  9,703  in Austevoll Seafood ASA on December 25, 2024 and sell it today you would earn a total of  447.00  from holding Austevoll Seafood ASA or generate 4.61% return on investment over 90 days.

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

Lindsell Train Investment  vs.  Austevoll Seafood ASA

Lindsell Train Investment

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lindsell Train Investment are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Lindsell Train 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

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Austevoll Seafood ASA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Austevoll Seafood is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Lindsell Train and Austevoll Seafood

The main advantage of trading using opposite Lindsell Train and Austevoll Seafood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lindsell Train 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 Lindsell Train Investment 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.

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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 Transaction History module to view history of all your transactions and understand their impact on performance.