Correlation Between Grieg Seafood and Andfjord Salmon

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

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

Diversification Opportunities for Grieg Seafood and Andfjord Salmon

0.49

Correlation Coefficient

Grieg Seafood  Andfjord Salmon

Very weak diversification

The 3 months correlation between Grieg and Andfjord is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Grieg Seafood ASA and Andfjord Salmon AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Andfjord Salmon AS and Grieg 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 Grieg Seafood ASA are associated (or correlated) with Andfjord Salmon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Andfjord Salmon AS has no effect on the direction of Grieg Seafood i.e., Grieg Seafood and Andfjord Salmon go up and down completely randomly.

Pair Corralation between Grieg Seafood and Andfjord Salmon

Assuming the 90 days trading horizon Grieg Seafood is expected to generate 1.07 times less return on investment than Andfjord Salmon. In addition to that, Grieg Seafood is 1.38 times more volatile than Andfjord Salmon AS. It trades about 0.14 of its total potential returns per unit of risk. Andfjord Salmon AS is currently generating about 0.2 per unit of volatility. If you would invest  3,140  in Andfjord Salmon AS on September 1, 2024 and sell it today you would earn a total of  930.00  from holding Andfjord Salmon AS or generate 29.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.48%
Values	Daily Returns

Grieg Seafood ASA  vs.  Andfjord Salmon AS

Grieg Seafood ASA

Risk-Adjusted Performance

10 of 100

OK

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

Andfjord Salmon AS

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Andfjord Salmon AS are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating essential indicators, Andfjord Salmon disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Grieg Seafood and Andfjord Salmon

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

The idea behind Grieg Seafood ASA and Andfjord Salmon 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 Transaction History module to view history of all your transactions and understand their impact on performance.