Correlation Between EAM Solar and Proximar Seafood

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

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

Diversification Opportunities for EAM Solar and Proximar Seafood

0.13

Correlation Coefficient

EAM Solar  Proximar Seafood

Average diversification

The 3 months correlation between EAM and Proximar is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding EAM Solar ASA and Proximar Seafood AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Proximar Seafood and EAM Solar 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 EAM Solar ASA are associated (or correlated) with Proximar Seafood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Proximar Seafood has no effect on the direction of EAM Solar i.e., EAM Solar and Proximar Seafood go up and down completely randomly.

Pair Corralation between EAM Solar and Proximar Seafood

Assuming the 90 days trading horizon EAM Solar ASA is expected to generate 40.22 times more return on investment than Proximar Seafood. However, EAM Solar is 40.22 times more volatile than Proximar Seafood AS. It trades about 0.14 of its potential returns per unit of risk. Proximar Seafood AS is currently generating about -0.04 per unit of risk. If you would invest  60.00  in EAM Solar ASA on September 18, 2024 and sell it today you would lose (45.00) from holding EAM Solar ASA or give up 75.0% of portfolio value over 90 days.

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

EAM Solar ASA  vs.  Proximar Seafood AS

EAM Solar ASA

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in EAM Solar ASA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating primary indicators, EAM Solar disclosed solid returns over the last few months and may actually be approaching a breakup point.

Proximar Seafood

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Proximar Seafood AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with EAM Solar and Proximar Seafood

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

The idea behind EAM Solar ASA and Proximar Seafood AS 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.