Correlation Between Austevoll Seafood and Lamar Advertising

Can any of the company-specific risk be diversified away by investing in both Austevoll Seafood and Lamar Advertising 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 Lamar Advertising 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 Lamar Advertising, you can compare the effects of market volatilities on Austevoll Seafood and Lamar Advertising 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 Lamar Advertising. Check out your portfolio center. Please also check ongoing floating volatility patterns of Austevoll Seafood and Lamar Advertising.

Diversification Opportunities for Austevoll Seafood and Lamar Advertising

0.48

Correlation Coefficient

Austevoll Seafood  Lamar Advertising

Very weak diversification

The 3 months correlation between Austevoll and Lamar is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Austevoll Seafood ASA and Lamar Advertising in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lamar Advertising 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 Lamar Advertising. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lamar Advertising has no effect on the direction of Austevoll Seafood i.e., Austevoll Seafood and Lamar Advertising go up and down completely randomly.

Pair Corralation between Austevoll Seafood and Lamar Advertising

Assuming the 90 days horizon Austevoll Seafood ASA is expected to generate 3.44 times more return on investment than Lamar Advertising. However, Austevoll Seafood is 3.44 times more volatile than Lamar Advertising. It trades about 0.05 of its potential returns per unit of risk. Lamar Advertising is currently generating about 0.05 per unit of risk. If you would invest  368.00  in Austevoll Seafood ASA on October 11, 2024 and sell it today you would earn a total of  476.00  from holding Austevoll Seafood ASA or generate 129.35% 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.  Lamar Advertising

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 latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Lamar Advertising

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lamar Advertising has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Lamar Advertising is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Austevoll Seafood and Lamar Advertising

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

The idea behind Austevoll Seafood ASA and Lamar Advertising 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.