Correlation Between Pf Bakkafrost and Carasent ASA

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

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

Diversification Opportunities for Pf Bakkafrost and Carasent ASA

0.73

Correlation Coefficient

Pf Bakkafrost  Carasent ASA

Poor diversification

The 3 months correlation between BAKKA and Carasent is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Pf Bakkafrost and Carasent ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carasent ASA and Pf Bakkafrost 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 Pf Bakkafrost are associated (or correlated) with Carasent ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carasent ASA has no effect on the direction of Pf Bakkafrost i.e., Pf Bakkafrost and Carasent ASA go up and down completely randomly.

Pair Corralation between Pf Bakkafrost and Carasent ASA

Assuming the 90 days trading horizon Pf Bakkafrost is expected to under-perform the Carasent ASA. But the stock apears to be less risky and, when comparing its historical volatility, Pf Bakkafrost is 1.8 times less risky than Carasent ASA. The stock trades about -0.04 of its potential returns per unit of risk. The Carasent ASA is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,975  in Carasent ASA on September 5, 2024 and sell it today you would earn a total of  135.00  from holding Carasent ASA or generate 6.84% return on investment over 90 days.

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

Pf Bakkafrost  vs.  Carasent ASA

Pf Bakkafrost

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pf Bakkafrost are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Pf Bakkafrost may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Carasent ASA

Risk-Adjusted Performance

12 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Carasent ASA are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Carasent ASA disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pf Bakkafrost and Carasent ASA

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

The idea behind Pf Bakkafrost and Carasent 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.