Correlation Between Arctic Fish and SalMar ASA

Can any of the company-specific risk be diversified away by investing in both Arctic Fish and SalMar ASA 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 Arctic Fish and SalMar ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Arctic Fish Holding and SalMar ASA, you can compare the effects of market volatilities on Arctic Fish and SalMar ASA 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 Arctic Fish with a short position of SalMar ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arctic Fish and SalMar ASA.

Diversification Opportunities for Arctic Fish and SalMar ASA

0.33

Correlation Coefficient

Arctic Fish  SalMar ASA

Weak diversification

The 3 months correlation between Arctic and SalMar is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Arctic Fish Holding and SalMar ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SalMar ASA and Arctic Fish 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 Arctic Fish Holding are associated (or correlated) with SalMar ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SalMar ASA has no effect on the direction of Arctic Fish i.e., Arctic Fish and SalMar ASA go up and down completely randomly.

Pair Corralation between Arctic Fish and SalMar ASA

Assuming the 90 days trading horizon Arctic Fish Holding is expected to generate 2.63 times more return on investment than SalMar ASA. However, Arctic Fish is 2.63 times more volatile than SalMar ASA. It trades about 0.16 of its potential returns per unit of risk. SalMar ASA is currently generating about 0.07 per unit of risk. If you would invest  4,740  in Arctic Fish Holding on September 5, 2024 and sell it today you would earn a total of  2,110  from holding Arctic Fish Holding or generate 44.51% return on investment over 90 days.

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

Arctic Fish Holding  vs.  SalMar ASA

Arctic Fish Holding

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Arctic Fish Holding are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Arctic Fish displayed solid returns over the last few months and may actually be approaching a breakup point.

SalMar ASA

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SalMar ASA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, SalMar ASA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Arctic Fish and SalMar ASA

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

The idea behind Arctic Fish Holding and SalMar ASA 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.