Correlation Between Nordic Aqua and Andfjord Salmon

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

By analyzing existing cross correlation between Nordic Aqua Partners and Andfjord Salmon AS, you can compare the effects of market volatilities on Nordic Aqua and Andfjord Salmon 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 Nordic Aqua with a short position of Andfjord Salmon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordic Aqua and Andfjord Salmon.

Diversification Opportunities for Nordic Aqua and Andfjord Salmon

-0.59

Correlation Coefficient

Nordic Aqua  Andfjord Salmon

Excellent diversification

The 3 months correlation between Nordic and Andfjord is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Nordic Aqua Partners and Andfjord Salmon AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Andfjord Salmon AS and Nordic Aqua 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 Nordic Aqua Partners are associated (or correlated) with Andfjord Salmon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Andfjord Salmon AS has no effect on the direction of Nordic Aqua i.e., Nordic Aqua and Andfjord Salmon go up and down completely randomly.

Pair Corralation between Nordic Aqua and Andfjord Salmon

Assuming the 90 days trading horizon Nordic Aqua Partners is expected to under-perform the Andfjord Salmon. In addition to that, Nordic Aqua is 1.09 times more volatile than Andfjord Salmon AS. It trades about -0.11 of its total potential returns per unit of risk. Andfjord Salmon AS is currently generating about 0.24 per unit of volatility. If you would invest  3,100  in Andfjord Salmon AS on September 4, 2024 and sell it today you would earn a total of  1,120  from holding Andfjord Salmon AS or generate 36.13% return on investment over 90 days.

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

Nordic Aqua Partners  vs.  Andfjord Salmon AS

Nordic Aqua Partners

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nordic Aqua Partners 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 essential indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Andfjord Salmon AS

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Andfjord Salmon AS are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating essential indicators, Andfjord Salmon disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nordic Aqua and Andfjord Salmon

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

The idea behind Nordic Aqua Partners and Andfjord Salmon 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.

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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.