Correlation Between SeaBird Exploration and Arctic Bioscience

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

By analyzing existing cross correlation between SeaBird Exploration Plc and Arctic Bioscience AS, you can compare the effects of market volatilities on SeaBird Exploration and Arctic Bioscience 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 SeaBird Exploration with a short position of Arctic Bioscience. Check out your portfolio center. Please also check ongoing floating volatility patterns of SeaBird Exploration and Arctic Bioscience.

Diversification Opportunities for SeaBird Exploration and Arctic Bioscience

0.05

Correlation Coefficient

SeaBird Exploration  Arctic Bioscience

Significant diversification

The 3 months correlation between SeaBird and Arctic is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding SeaBird Exploration Plc and Arctic Bioscience AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arctic Bioscience and SeaBird Exploration 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 SeaBird Exploration Plc are associated (or correlated) with Arctic Bioscience. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arctic Bioscience has no effect on the direction of SeaBird Exploration i.e., SeaBird Exploration and Arctic Bioscience go up and down completely randomly.

Pair Corralation between SeaBird Exploration and Arctic Bioscience

Assuming the 90 days trading horizon SeaBird Exploration is expected to generate 17.47 times less return on investment than Arctic Bioscience. But when comparing it to its historical volatility, SeaBird Exploration Plc is 4.51 times less risky than Arctic Bioscience. It trades about 0.06 of its potential returns per unit of risk. Arctic Bioscience AS is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  195.00  in Arctic Bioscience AS on December 27, 2024 and sell it today you would earn a total of  380.00  from holding Arctic Bioscience AS or generate 194.87% return on investment over 90 days.

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

SeaBird Exploration Plc  vs.  Arctic Bioscience AS

SeaBird Exploration Plc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SeaBird Exploration Plc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, SeaBird Exploration may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Arctic Bioscience

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Arctic Bioscience AS are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Arctic Bioscience disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SeaBird Exploration and Arctic Bioscience

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

The idea behind SeaBird Exploration Plc and Arctic Bioscience AS 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.