Correlation Between Austevoll Seafood and Yakult Honsha

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

Diversification Opportunities for Austevoll Seafood and Yakult Honsha

-0.15

Correlation Coefficient

Austevoll Seafood  Yakult Honsha

Good diversification

The 3 months correlation between Austevoll and Yakult is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Austevoll Seafood ASA and Yakult Honsha CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yakult Honsha CoLtd 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 Yakult Honsha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yakult Honsha CoLtd has no effect on the direction of Austevoll Seafood i.e., Austevoll Seafood and Yakult Honsha go up and down completely randomly.

Pair Corralation between Austevoll Seafood and Yakult Honsha

Assuming the 90 days horizon Austevoll Seafood ASA is expected to generate 1.14 times more return on investment than Yakult Honsha. However, Austevoll Seafood is 1.14 times more volatile than Yakult Honsha CoLtd. It trades about 0.06 of its potential returns per unit of risk. Yakult Honsha CoLtd is currently generating about 0.01 per unit of risk. If you would invest  822.00  in Austevoll Seafood ASA on December 30, 2024 and sell it today you would earn a total of  59.00  from holding Austevoll Seafood ASA or generate 7.18% return on investment over 90 days.

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

Austevoll Seafood ASA  vs.  Yakult Honsha CoLtd

Austevoll Seafood ASA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Austevoll Seafood ASA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Austevoll Seafood may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Yakult Honsha CoLtd

Risk-Adjusted Performance

Very Weak

Over the last 90 days Yakult Honsha CoLtd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Yakult Honsha is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Austevoll Seafood and Yakult Honsha

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

The idea behind Austevoll Seafood ASA and Yakult Honsha CoLtd 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.