Correlation Between Grieg Seafood and Anglo Asian

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

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

Diversification Opportunities for Grieg Seafood and Anglo Asian

0.83

Correlation Coefficient

Grieg Seafood  Anglo Asian

Very poor diversification

The 3 months correlation between Grieg and Anglo is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Grieg Seafood and Anglo Asian Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anglo Asian Mining and Grieg 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 Grieg Seafood are associated (or correlated) with Anglo Asian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anglo Asian Mining has no effect on the direction of Grieg Seafood i.e., Grieg Seafood and Anglo Asian go up and down completely randomly.

Pair Corralation between Grieg Seafood and Anglo Asian

Assuming the 90 days trading horizon Grieg Seafood is expected to generate 10.59 times less return on investment than Anglo Asian. But when comparing it to its historical volatility, Grieg Seafood is 1.57 times less risky than Anglo Asian. It trades about 0.01 of its potential returns per unit of risk. Anglo Asian Mining is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  7,400  in Anglo Asian Mining on August 31, 2024 and sell it today you would earn a total of  2,200  from holding Anglo Asian Mining or generate 29.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.6%
Values	Daily Returns

Grieg Seafood  vs.  Anglo Asian Mining

Grieg Seafood

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Grieg Seafood are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Grieg Seafood unveiled solid returns over the last few months and may actually be approaching a breakup point.

Anglo Asian Mining

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Anglo Asian Mining are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Anglo Asian exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Grieg Seafood and Anglo Asian

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

The idea behind Grieg Seafood and Anglo Asian Mining 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.