Correlation Between Grieg Seafood and Grong Sparebank

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

Diversification Opportunities for Grieg Seafood and Grong Sparebank

0.23

Correlation Coefficient

Grieg Seafood  Grong Sparebank

Modest diversification

The 3 months correlation between Grieg and Grong is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Grieg Seafood ASA and Grong Sparebank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grong Sparebank 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 Grong Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grong Sparebank has no effect on the direction of Grieg Seafood i.e., Grieg Seafood and Grong Sparebank go up and down completely randomly.

Pair Corralation between Grieg Seafood and Grong Sparebank

Assuming the 90 days trading horizon Grieg Seafood ASA is expected to generate 1.96 times more return on investment than Grong Sparebank. However, Grieg Seafood is 1.96 times more volatile than Grong Sparebank. It trades about 0.03 of its potential returns per unit of risk. Grong Sparebank is currently generating about 0.02 per unit of risk. If you would invest  5,855  in Grieg Seafood ASA on September 26, 2024 and sell it today you would earn a total of  145.00  from holding Grieg Seafood ASA or generate 2.48% return on investment over 90 days.

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

Grieg Seafood ASA  vs.  Grong Sparebank

Grieg Seafood ASA

Risk-Adjusted Performance

2 of 100

Weak

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

Grong Sparebank

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Grong Sparebank are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Grong Sparebank is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Grieg Seafood and Grong Sparebank

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

The idea behind Grieg Seafood ASA and Grong 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.