Correlation Between Salmon Evolution and Clean Seas

Can any of the company-specific risk be diversified away by investing in both Salmon Evolution and Clean Seas 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 Clean Seas 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 Clean Seas Seafood, you can compare the effects of market volatilities on Salmon Evolution and Clean Seas 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 Clean Seas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salmon Evolution and Clean Seas.

Diversification Opportunities for Salmon Evolution and Clean Seas

-0.12

Correlation Coefficient

Salmon Evolution  Clean Seas

Good diversification

The 3 months correlation between Salmon and Clean is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Salmon Evolution Holding and Clean Seas Seafood in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clean Seas Seafood 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 Clean Seas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clean Seas Seafood has no effect on the direction of Salmon Evolution i.e., Salmon Evolution and Clean Seas go up and down completely randomly.

Pair Corralation between Salmon Evolution and Clean Seas

Assuming the 90 days trading horizon Salmon Evolution Holding is expected to generate 0.38 times more return on investment than Clean Seas. However, Salmon Evolution Holding is 2.65 times less risky than Clean Seas. It trades about 0.04 of its potential returns per unit of risk. Clean Seas Seafood is currently generating about -0.26 per unit of risk. If you would invest  649.00  in Salmon Evolution Holding on September 5, 2024 and sell it today you would earn a total of  20.00  from holding Salmon Evolution Holding or generate 3.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Salmon Evolution Holding  vs.  Clean Seas Seafood

Salmon Evolution Holding

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Salmon Evolution Holding are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Salmon Evolution is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Clean Seas Seafood

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Clean Seas Seafood 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 basic 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.

Pair Trading with Salmon Evolution and Clean Seas

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

The idea behind Salmon Evolution Holding and Clean Seas Seafood 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.