Correlation Between SENECA FOODS-A and OtelloASA

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

By analyzing existing cross correlation between SENECA FOODS A and Otello ASA, you can compare the effects of market volatilities on SENECA FOODS-A and OtelloASA 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 SENECA FOODS-A with a short position of OtelloASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of SENECA FOODS-A and OtelloASA.

Diversification Opportunities for SENECA FOODS-A and OtelloASA

-0.49

Correlation Coefficient

SENECA FOODS-A  OtelloASA

Very good diversification

The 3 months correlation between SENECA and OtelloASA is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding SENECA FOODS A and Otello ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Otello ASA and SENECA FOODS-A 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 SENECA FOODS A are associated (or correlated) with OtelloASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Otello ASA has no effect on the direction of SENECA FOODS-A i.e., SENECA FOODS-A and OtelloASA go up and down completely randomly.

Pair Corralation between SENECA FOODS-A and OtelloASA

Assuming the 90 days trading horizon SENECA FOODS A is expected to generate 2.02 times more return on investment than OtelloASA. However, SENECA FOODS-A is 2.02 times more volatile than Otello ASA. It trades about 0.14 of its potential returns per unit of risk. Otello ASA is currently generating about -0.13 per unit of risk. If you would invest  6,650  in SENECA FOODS A on October 9, 2024 and sell it today you would earn a total of  400.00  from holding SENECA FOODS A or generate 6.02% return on investment over 90 days.

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

SENECA FOODS A  vs.  Otello ASA

SENECA FOODS A

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SENECA FOODS A are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, SENECA FOODS-A exhibited solid returns over the last few months and may actually be approaching a breakup point.

Otello ASA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Otello ASA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, OtelloASA is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with SENECA FOODS-A and OtelloASA

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

The idea behind SENECA FOODS A and Otello 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.