Correlation Between Austevoll Seafood and Melhus Sparebank

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

Diversification Opportunities for Austevoll Seafood and Melhus Sparebank

0.27
  Correlation Coefficient

Modest diversification

The 3 months correlation between Austevoll and Melhus is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Austevoll Seafood ASA and Melhus Sparebank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Melhus Sparebank 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 Melhus Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Melhus Sparebank has no effect on the direction of Austevoll Seafood i.e., Austevoll Seafood and Melhus Sparebank go up and down completely randomly.

Pair Corralation between Austevoll Seafood and Melhus Sparebank

Assuming the 90 days trading horizon Austevoll Seafood is expected to generate 2.11 times less return on investment than Melhus Sparebank. In addition to that, Austevoll Seafood is 1.54 times more volatile than Melhus Sparebank. It trades about 0.03 of its total potential returns per unit of risk. Melhus Sparebank is currently generating about 0.09 per unit of volatility. If you would invest  15,600  in Melhus Sparebank on September 26, 2024 and sell it today you would earn a total of  696.00  from holding Melhus Sparebank or generate 4.46% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Austevoll Seafood ASA  vs.  Melhus Sparebank

 Performance 
       Timeline  
Austevoll Seafood ASA 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Austevoll Seafood ASA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, Austevoll Seafood is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.
Melhus Sparebank 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Melhus Sparebank are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, Melhus Sparebank is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Austevoll Seafood and Melhus Sparebank Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Austevoll Seafood and Melhus Sparebank

The main advantage of trading using opposite Austevoll Seafood and Melhus Sparebank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Austevoll Seafood position performs unexpectedly, Melhus Sparebank 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 Melhus Sparebank will offset losses from the drop in Melhus Sparebank's long position.
The idea behind Austevoll Seafood ASA and Melhus Sparebank 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.

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