Correlation Between Transportadora and Austevoll Seafood

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

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

Diversification Opportunities for Transportadora and Austevoll Seafood

0.37

Correlation Coefficient

Transportadora  Austevoll Seafood

Weak diversification

The 3 months correlation between Transportadora and Austevoll is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Transportadora de Gas 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 Transportadora 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 Transportadora de Gas 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 Transportadora i.e., Transportadora and Austevoll Seafood go up and down completely randomly.

Pair Corralation between Transportadora and Austevoll Seafood

Assuming the 90 days trading horizon Transportadora de Gas is expected to generate 2.77 times more return on investment than Austevoll Seafood. However, Transportadora is 2.77 times more volatile than Austevoll Seafood ASA. It trades about 0.19 of its potential returns per unit of risk. Austevoll Seafood ASA is currently generating about 0.07 per unit of risk. If you would invest  2,180  in Transportadora de Gas on October 6, 2024 and sell it today you would earn a total of  1,020  from holding Transportadora de Gas or generate 46.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	97.5%
Values	Daily Returns

Transportadora de Gas  vs.  Austevoll Seafood ASA

Transportadora de Gas

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Transportadora de Gas are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward-looking signals, Transportadora reported solid returns over the last few months and may actually be approaching a breakup point.

Austevoll Seafood ASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Austevoll Seafood ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Austevoll Seafood is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Transportadora and Austevoll Seafood

The main advantage of trading using opposite Transportadora and Austevoll Seafood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transportadora 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 Transportadora de Gas 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.