Correlation Between Mowi ASA and Fresh Del

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

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

Diversification Opportunities for Mowi ASA and Fresh Del

0.22

Correlation Coefficient

Mowi ASA  Fresh Del

Modest diversification

The 3 months correlation between Mowi and Fresh is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Mowi ASA and Fresh Del Monte in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fresh Del Monte and Mowi 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 Mowi ASA are associated (or correlated) with Fresh Del. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fresh Del Monte has no effect on the direction of Mowi ASA i.e., Mowi ASA and Fresh Del go up and down completely randomly.

Pair Corralation between Mowi ASA and Fresh Del

Assuming the 90 days horizon Mowi ASA is expected to generate 1.42 times more return on investment than Fresh Del. However, Mowi ASA is 1.42 times more volatile than Fresh Del Monte. It trades about 0.02 of its potential returns per unit of risk. Fresh Del Monte is currently generating about -0.27 per unit of risk. If you would invest  1,828  in Mowi ASA on October 26, 2024 and sell it today you would earn a total of  7.00  from holding Mowi ASA or generate 0.38% return on investment over 90 days.

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

Mowi ASA  vs.  Fresh Del Monte

Mowi ASA

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mowi ASA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Mowi ASA is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Fresh Del Monte

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fresh Del Monte are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating fundamental indicators, Fresh Del may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Mowi ASA and Fresh Del

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

The idea behind Mowi ASA and Fresh Del Monte 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.