Correlation Between Andfjord Salmon and Byggma

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

By analyzing existing cross correlation between Andfjord Salmon AS and Byggma, you can compare the effects of market volatilities on Andfjord Salmon and Byggma 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 Andfjord Salmon with a short position of Byggma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Andfjord Salmon and Byggma.

Diversification Opportunities for Andfjord Salmon and Byggma

-0.79

Correlation Coefficient

Andfjord Salmon  Byggma

Pay attention - limited upside

The 3 months correlation between Andfjord and Byggma is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Andfjord Salmon AS and Byggma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Byggma and Andfjord Salmon 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 Andfjord Salmon AS are associated (or correlated) with Byggma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Byggma has no effect on the direction of Andfjord Salmon i.e., Andfjord Salmon and Byggma go up and down completely randomly.

Pair Corralation between Andfjord Salmon and Byggma

Assuming the 90 days trading horizon Andfjord Salmon AS is expected to generate 0.61 times more return on investment than Byggma. However, Andfjord Salmon AS is 1.64 times less risky than Byggma. It trades about 0.12 of its potential returns per unit of risk. Byggma is currently generating about 0.02 per unit of risk. If you would invest  3,920  in Andfjord Salmon AS on September 25, 2024 and sell it today you would earn a total of  180.00  from holding Andfjord Salmon AS or generate 4.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Andfjord Salmon AS  vs.  Byggma

Andfjord Salmon AS

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Andfjord Salmon AS are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Andfjord Salmon disclosed solid returns over the last few months and may actually be approaching a breakup point.

Byggma

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Byggma has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Andfjord Salmon and Byggma

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

The idea behind Andfjord Salmon AS and Byggma 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.

Check out your portfolio center.

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.