Correlation Between Power Metal and Austevoll Seafood

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

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

Diversification Opportunities for Power Metal and Austevoll Seafood

0.55

Correlation Coefficient

Power Metal  Austevoll Seafood

Very weak diversification

The 3 months correlation between Power and Austevoll is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Power Metal Resources 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 Power Metal 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 Power Metal Resources 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 Power Metal i.e., Power Metal and Austevoll Seafood go up and down completely randomly.

Pair Corralation between Power Metal and Austevoll Seafood

Assuming the 90 days trading horizon Power Metal Resources is expected to under-perform the Austevoll Seafood. In addition to that, Power Metal is 1.68 times more volatile than Austevoll Seafood ASA. It trades about -0.17 of its total potential returns per unit of risk. Austevoll Seafood ASA is currently generating about -0.18 per unit of volatility. If you would invest  10,190  in Austevoll Seafood ASA on October 7, 2024 and sell it today you would lose (392.00) from holding Austevoll Seafood ASA or give up 3.85% of portfolio value over 90 days.

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

Power Metal Resources  vs.  Austevoll Seafood ASA

Power Metal Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Power Metal Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Austevoll Seafood ASA

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Austevoll Seafood ASA are ranked lower than 1 (%) 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 newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Power Metal and Austevoll Seafood

The main advantage of trading using opposite Power Metal and Austevoll Seafood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power Metal 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 Power Metal Resources 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.