Correlation Between Proximar Seafood and Sea1 Offshore

Can any of the company-specific risk be diversified away by investing in both Proximar Seafood and Sea1 Offshore 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 Proximar Seafood and Sea1 Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Proximar Seafood AS and Sea1 Offshore, you can compare the effects of market volatilities on Proximar Seafood and Sea1 Offshore 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 Proximar Seafood with a short position of Sea1 Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Proximar Seafood and Sea1 Offshore.

Diversification Opportunities for Proximar Seafood and Sea1 Offshore

0.46

Correlation Coefficient

Proximar Seafood  Sea1 Offshore

Very weak diversification

The 3 months correlation between Proximar and Sea1 is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Proximar Seafood AS and Sea1 Offshore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sea1 Offshore and Proximar Seafood 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 Proximar Seafood AS are associated (or correlated) with Sea1 Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sea1 Offshore has no effect on the direction of Proximar Seafood i.e., Proximar Seafood and Sea1 Offshore go up and down completely randomly.

Pair Corralation between Proximar Seafood and Sea1 Offshore

Assuming the 90 days trading horizon Proximar Seafood AS is expected to under-perform the Sea1 Offshore. But the stock apears to be less risky and, when comparing its historical volatility, Proximar Seafood AS is 1.57 times less risky than Sea1 Offshore. The stock trades about -0.01 of its potential returns per unit of risk. The Sea1 Offshore is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,896  in Sea1 Offshore on December 28, 2024 and sell it today you would earn a total of  184.00  from holding Sea1 Offshore or generate 9.7% return on investment over 90 days.

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

Proximar Seafood AS  vs.  Sea1 Offshore

Proximar Seafood

Risk-Adjusted Performance

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 latest stock price disarray, may contribute to short-term losses for the investors.

Sea1 Offshore

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sea1 Offshore are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating essential indicators, Sea1 Offshore disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Proximar Seafood and Sea1 Offshore

The main advantage of trading using opposite Proximar Seafood and Sea1 Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Proximar Seafood position performs unexpectedly, Sea1 Offshore 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 Sea1 Offshore will offset losses from the drop in Sea1 Offshore's long position.

The idea behind Proximar Seafood AS and Sea1 Offshore 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.