Correlation Between Mowi ASA and Austevoll Seafood

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

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

Diversification Opportunities for Mowi ASA and Austevoll Seafood

0.82

Correlation Coefficient

Mowi ASA  Austevoll Seafood

Very poor diversification

The 3 months correlation between Mowi and Austevoll is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Mowi ASA 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 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 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 Mowi ASA i.e., Mowi ASA and Austevoll Seafood go up and down completely randomly.

Pair Corralation between Mowi ASA and Austevoll Seafood

Assuming the 90 days trading horizon Mowi ASA is expected to generate 1.07 times more return on investment than Austevoll Seafood. However, Mowi ASA is 1.07 times more volatile than Austevoll Seafood ASA. It trades about 0.14 of its potential returns per unit of risk. Austevoll Seafood ASA is currently generating about 0.13 per unit of risk. If you would invest  17,936  in Mowi ASA on September 3, 2024 and sell it today you would earn a total of  2,104  from holding Mowi ASA or generate 11.73% return on investment over 90 days.

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

Mowi ASA  vs.  Austevoll Seafood ASA

Mowi ASA

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mowi ASA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Mowi ASA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Austevoll Seafood ASA

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Austevoll Seafood ASA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Austevoll Seafood may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Mowi ASA and Austevoll Seafood

The main advantage of trading using opposite Mowi ASA and Austevoll Seafood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mowi ASA 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 Mowi ASA 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.