Correlation Between Austevoll Seafood and PayPal Holdings

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

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

Diversification Opportunities for Austevoll Seafood and PayPal Holdings

0.45

Correlation Coefficient

Austevoll Seafood  PayPal Holdings

Very weak diversification

The 3 months correlation between Austevoll and PayPal is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Austevoll Seafood ASA and PayPal Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PayPal Holdings and Austevoll Seafood 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 Austevoll Seafood ASA are associated (or correlated) with PayPal Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PayPal Holdings has no effect on the direction of Austevoll Seafood i.e., Austevoll Seafood and PayPal Holdings go up and down completely randomly.

Pair Corralation between Austevoll Seafood and PayPal Holdings

Assuming the 90 days horizon Austevoll Seafood is expected to generate 4.86 times less return on investment than PayPal Holdings. In addition to that, Austevoll Seafood is 2.46 times more volatile than PayPal Holdings. It trades about 0.01 of its total potential returns per unit of risk. PayPal Holdings is currently generating about 0.07 per unit of volatility. If you would invest  8,530  in PayPal Holdings on October 9, 2024 and sell it today you would earn a total of  92.00  from holding PayPal Holdings or generate 1.08% return on investment over 90 days.

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

Austevoll Seafood ASA  vs.  PayPal Holdings

Austevoll Seafood ASA

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Austevoll Seafood ASA are ranked lower than 3 (%) 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.

PayPal Holdings

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PayPal Holdings are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, PayPal Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Austevoll Seafood and PayPal Holdings

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

The idea behind Austevoll Seafood ASA and PayPal Holdings 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.