Correlation Between SalMar ASA and Atlantic Sapphire

Can any of the company-specific risk be diversified away by investing in both SalMar ASA and Atlantic Sapphire 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 SalMar ASA and Atlantic Sapphire into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for SalMar ASA and Atlantic Sapphire

-0.72

Correlation Coefficient

SalMar ASA  Atlantic Sapphire

Pay attention - limited upside

The 3 months correlation between SalMar and Atlantic is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding SalMar ASA and Atlantic Sapphire ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlantic Sapphire ASA and SalMar ASA 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 SalMar ASA are associated (or correlated) with Atlantic Sapphire. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlantic Sapphire ASA has no effect on the direction of SalMar ASA i.e., SalMar ASA and Atlantic Sapphire go up and down completely randomly.

Pair Corralation between SalMar ASA and Atlantic Sapphire

Assuming the 90 days horizon SalMar ASA is expected to generate 6.06 times less return on investment than Atlantic Sapphire. But when comparing it to its historical volatility, SalMar ASA is 82.84 times less risky than Atlantic Sapphire. It trades about 0.12 of its potential returns per unit of risk. Atlantic Sapphire ASA is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  3.38  in Atlantic Sapphire ASA on September 15, 2024 and sell it today you would lose (2.46) from holding Atlantic Sapphire ASA or give up 72.78% of portfolio value over 90 days.

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

SalMar ASA  vs.  Atlantic Sapphire ASA

SalMar ASA

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SalMar ASA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, SalMar ASA is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Atlantic Sapphire ASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Atlantic Sapphire ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly weak basic indicators, Atlantic Sapphire may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with SalMar ASA and Atlantic Sapphire

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

The idea behind SalMar ASA and Atlantic Sapphire 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.

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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.