Correlation Between Andfjord Salmon and Ice Fish

Can any of the company-specific risk be diversified away by investing in both Andfjord Salmon and Ice Fish 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 Ice Fish 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 Ice Fish Farm, you can compare the effects of market volatilities on Andfjord Salmon and Ice Fish 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 Ice Fish. Check out your portfolio center. Please also check ongoing floating volatility patterns of Andfjord Salmon and Ice Fish.

Diversification Opportunities for Andfjord Salmon and Ice Fish

0.65

Correlation Coefficient

Andfjord Salmon  Ice Fish

Poor diversification

The 3 months correlation between Andfjord and Ice is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Andfjord Salmon AS and Ice Fish Farm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ice Fish Farm 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 Ice Fish. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ice Fish Farm has no effect on the direction of Andfjord Salmon i.e., Andfjord Salmon and Ice Fish go up and down completely randomly.

Pair Corralation between Andfjord Salmon and Ice Fish

Assuming the 90 days trading horizon Andfjord Salmon AS is expected to generate 0.45 times more return on investment than Ice Fish. However, Andfjord Salmon AS is 2.21 times less risky than Ice Fish. It trades about 0.21 of its potential returns per unit of risk. Ice Fish Farm is currently generating about 0.08 per unit of risk. If you would invest  3,110  in Andfjord Salmon AS on September 26, 2024 and sell it today you would earn a total of  990.00  from holding Andfjord Salmon AS or generate 31.83% return on investment over 90 days.

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

Andfjord Salmon AS  vs.  Ice Fish Farm

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.

Ice Fish Farm

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ice Fish Farm are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Ice Fish displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Andfjord Salmon and Ice Fish

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

The idea behind Andfjord Salmon AS and Ice Fish Farm 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.