Correlation Between Norwegian Air and Proximar Seafood

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

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

Diversification Opportunities for Norwegian Air and Proximar Seafood

-0.03

Correlation Coefficient

Norwegian Air  Proximar Seafood

Good diversification

The 3 months correlation between Norwegian and Proximar is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Norwegian Air Shuttle and Proximar Seafood AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Proximar Seafood and Norwegian Air 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 Norwegian Air Shuttle are associated (or correlated) with Proximar Seafood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Proximar Seafood has no effect on the direction of Norwegian Air i.e., Norwegian Air and Proximar Seafood go up and down completely randomly.

Pair Corralation between Norwegian Air and Proximar Seafood

Assuming the 90 days trading horizon Norwegian Air Shuttle is expected to generate 0.79 times more return on investment than Proximar Seafood. However, Norwegian Air Shuttle is 1.26 times less risky than Proximar Seafood. It trades about 0.01 of its potential returns per unit of risk. Proximar Seafood AS is currently generating about 0.0 per unit of risk. If you would invest  1,108  in Norwegian Air Shuttle on October 27, 2024 and sell it today you would lose (58.00) from holding Norwegian Air Shuttle or give up 5.23% of portfolio value over 90 days.

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

Norwegian Air Shuttle  vs.  Proximar Seafood AS

Norwegian Air Shuttle

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Norwegian Air Shuttle are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Norwegian Air may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Proximar Seafood

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Proximar Seafood AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Proximar Seafood is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Norwegian Air and Proximar Seafood

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

The idea behind Norwegian Air Shuttle and Proximar Seafood AS 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.