Correlation Between SD Standard and Proximar Seafood

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Can any of the company-specific risk be diversified away by investing in both SD Standard and Proximar Seafood 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 SD Standard and Proximar Seafood into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SD Standard Drilling and Proximar Seafood AS, you can compare the effects of market volatilities on SD Standard and Proximar Seafood 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 SD Standard with a short position of Proximar Seafood. Check out your portfolio center. Please also check ongoing floating volatility patterns of SD Standard and Proximar Seafood.

Diversification Opportunities for SD Standard and Proximar Seafood

-0.36
  Correlation Coefficient

Very good diversification

The 3 months correlation between SDSD and Proximar is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding SD Standard Drilling and Proximar Seafood AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Proximar Seafood and SD Standard 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 SD Standard Drilling are associated (or correlated) with Proximar Seafood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Proximar Seafood has no effect on the direction of SD Standard i.e., SD Standard and Proximar Seafood go up and down completely randomly.

Pair Corralation between SD Standard and Proximar Seafood

Assuming the 90 days trading horizon SD Standard is expected to generate 5.39 times less return on investment than Proximar Seafood. But when comparing it to its historical volatility, SD Standard Drilling is 1.6 times less risky than Proximar Seafood. It trades about 0.01 of its potential returns per unit of risk. Proximar Seafood AS is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  354.00  in Proximar Seafood AS on October 12, 2024 and sell it today you would earn a total of  1.00  from holding Proximar Seafood AS or generate 0.28% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

SD Standard Drilling  vs.  Proximar Seafood AS

 Performance 
       Timeline  
SD Standard Drilling 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in SD Standard Drilling are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, SD Standard is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.
Proximar Seafood 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.

SD Standard and Proximar Seafood Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with SD Standard and Proximar Seafood

The main advantage of trading using opposite SD Standard and Proximar Seafood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SD Standard position performs unexpectedly, Proximar Seafood 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 Proximar Seafood will offset losses from the drop in Proximar Seafood's long position.
The idea behind SD Standard Drilling and Proximar Seafood 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.
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.

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