Correlation Between Austevoll Seafood and United Airlines

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

Diversification Opportunities for Austevoll Seafood and United Airlines

0.39

Correlation Coefficient

Austevoll Seafood  United Airlines

Weak diversification

The 3 months correlation between Austevoll and United is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Austevoll Seafood ASA and United Airlines Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Airlines 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 United Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Airlines Holdings has no effect on the direction of Austevoll Seafood i.e., Austevoll Seafood and United Airlines go up and down completely randomly.

Pair Corralation between Austevoll Seafood and United Airlines

Assuming the 90 days horizon Austevoll Seafood ASA is expected to under-perform the United Airlines. But the stock apears to be less risky and, when comparing its historical volatility, Austevoll Seafood ASA is 1.06 times less risky than United Airlines. The stock trades about -0.07 of its potential returns per unit of risk. The United Airlines Holdings is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  9,139  in United Airlines Holdings on October 4, 2024 and sell it today you would earn a total of  361.00  from holding United Airlines Holdings or generate 3.95% return on investment over 90 days.

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

Austevoll Seafood ASA  vs.  United Airlines Holdings

Austevoll Seafood ASA

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Austevoll Seafood ASA are ranked lower than 1 (%) 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.

United Airlines Holdings

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in United Airlines Holdings are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, United Airlines reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Austevoll Seafood and United Airlines

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

The idea behind Austevoll Seafood ASA and United Airlines 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.