Correlation Between Austevoll Seafood and InterContinental

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

Diversification Opportunities for Austevoll Seafood and InterContinental

0.48

Correlation Coefficient

Austevoll Seafood  InterContinental

Very weak diversification

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

Pair Corralation between Austevoll Seafood and InterContinental

Assuming the 90 days horizon Austevoll Seafood ASA is expected to generate 4.13 times more return on investment than InterContinental. However, Austevoll Seafood is 4.13 times more volatile than InterContinental Hotels Group. It trades about 0.05 of its potential returns per unit of risk. InterContinental Hotels Group is currently generating about 0.11 per unit of risk. If you would invest  377.00  in Austevoll Seafood ASA on October 5, 2024 and sell it today you would earn a total of  445.00  from holding Austevoll Seafood ASA or generate 118.04% 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.  InterContinental Hotels Group

Austevoll Seafood ASA

Risk-Adjusted Performance

0 of 100

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

InterContinental Hotels

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days InterContinental Hotels Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, InterContinental reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Austevoll Seafood and InterContinental

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

The idea behind Austevoll Seafood ASA and InterContinental Hotels Group 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.