Correlation Between SLC Agricola and Austevoll Seafood

Can any of the company-specific risk be diversified away by investing in both SLC Agricola and Austevoll 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 SLC Agricola and Austevoll Seafood into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for SLC Agricola and Austevoll Seafood

0.02

Correlation Coefficient

SLC Agricola  Austevoll Seafood

Significant diversification

The 3 months correlation between SLC and Austevoll is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding SLC Agricola SA and Austevoll Seafood ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Austevoll Seafood ASA and SLC Agricola 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 SLC Agricola SA are associated (or correlated) with Austevoll Seafood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Austevoll Seafood ASA has no effect on the direction of SLC Agricola i.e., SLC Agricola and Austevoll Seafood go up and down completely randomly.

Pair Corralation between SLC Agricola and Austevoll Seafood

Assuming the 90 days horizon SLC Agricola is expected to generate 1.96 times less return on investment than Austevoll Seafood. In addition to that, SLC Agricola is 2.73 times more volatile than Austevoll Seafood ASA. It trades about 0.01 of its total potential returns per unit of risk. Austevoll Seafood ASA is currently generating about 0.06 per unit of volatility. If you would invest  855.00  in Austevoll Seafood ASA on September 14, 2024 and sell it today you would earn a total of  25.00  from holding Austevoll Seafood ASA or generate 2.92% return on investment over 90 days.

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

SLC Agricola SA  vs.  Austevoll Seafood ASA

SLC Agricola SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SLC Agricola SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward-looking indicators, SLC Agricola is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Austevoll Seafood ASA

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Austevoll Seafood ASA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Austevoll Seafood is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with SLC Agricola and Austevoll Seafood

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

The idea behind SLC Agricola SA and Austevoll Seafood 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.

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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.