Correlation Between Salmon Evolution and Arctic Fish

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

By analyzing existing cross correlation between Salmon Evolution Holding and Arctic Fish Holding, you can compare the effects of market volatilities on Salmon Evolution and Arctic Fish 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 Salmon Evolution with a short position of Arctic Fish. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salmon Evolution and Arctic Fish.

Diversification Opportunities for Salmon Evolution and Arctic Fish

-0.23

Correlation Coefficient

Salmon Evolution  Arctic Fish

Very good diversification

The 3 months correlation between Salmon and Arctic is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Salmon Evolution Holding and Arctic Fish Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arctic Fish Holding and Salmon Evolution 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 Salmon Evolution Holding are associated (or correlated) with Arctic Fish. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arctic Fish Holding has no effect on the direction of Salmon Evolution i.e., Salmon Evolution and Arctic Fish go up and down completely randomly.

Pair Corralation between Salmon Evolution and Arctic Fish

Assuming the 90 days trading horizon Salmon Evolution Holding is expected to generate 0.5 times more return on investment than Arctic Fish. However, Salmon Evolution Holding is 2.02 times less risky than Arctic Fish. It trades about 0.0 of its potential returns per unit of risk. Arctic Fish Holding is currently generating about -0.04 per unit of risk. If you would invest  662.00  in Salmon Evolution Holding on November 28, 2024 and sell it today you would lose (5.00) from holding Salmon Evolution Holding or give up 0.76% of portfolio value over 90 days.

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

Salmon Evolution Holding  vs.  Arctic Fish Holding

Salmon Evolution Holding

Risk-Adjusted Performance

Very Weak

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

Arctic Fish Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days Arctic Fish Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Salmon Evolution and Arctic Fish

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

The idea behind Salmon Evolution Holding and Arctic Fish Holding 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.