Correlation Between Blue Star and Orkla ASA

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

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

Diversification Opportunities for Blue Star and Orkla ASA

0.7

Correlation Coefficient

Blue Star  Orkla ASA

Poor diversification

The 3 months correlation between Blue and Orkla is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Blue Star Foods and Orkla ASA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orkla ASA ADR and Blue Star 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 Blue Star Foods are associated (or correlated) with Orkla ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orkla ASA ADR has no effect on the direction of Blue Star i.e., Blue Star and Orkla ASA go up and down completely randomly.

Pair Corralation between Blue Star and Orkla ASA

Given the investment horizon of 90 days Blue Star Foods is expected to under-perform the Orkla ASA. In addition to that, Blue Star is 8.47 times more volatile than Orkla ASA ADR. It trades about -0.11 of its total potential returns per unit of risk. Orkla ASA ADR is currently generating about 0.06 per unit of volatility. If you would invest  807.00  in Orkla ASA ADR on September 30, 2024 and sell it today you would earn a total of  79.00  from holding Orkla ASA ADR or generate 9.79% return on investment over 90 days.

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

Blue Star Foods  vs.  Orkla ASA ADR

Blue Star Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blue Star Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Orkla ASA ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Orkla ASA ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong essential indicators, Orkla ASA is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Blue Star and Orkla ASA

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

The idea behind Blue Star Foods and Orkla ASA ADR 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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.