Correlation Between Jaeren Sparebank and Austevoll Seafood

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

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

Diversification Opportunities for Jaeren Sparebank and Austevoll Seafood

0.3

Correlation Coefficient

Jaeren Sparebank  Austevoll Seafood

Weak diversification

The 3 months correlation between Jaeren and Austevoll is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Jaeren Sparebank and Austevoll Seafood ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Austevoll Seafood ASA and Jaeren Sparebank 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 Jaeren Sparebank are associated (or correlated) with Austevoll Seafood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Austevoll Seafood ASA has no effect on the direction of Jaeren Sparebank i.e., Jaeren Sparebank and Austevoll Seafood go up and down completely randomly.

Pair Corralation between Jaeren Sparebank and Austevoll Seafood

Assuming the 90 days trading horizon Jaeren Sparebank is expected to generate 1.05 times more return on investment than Austevoll Seafood. However, Jaeren Sparebank is 1.05 times more volatile than Austevoll Seafood ASA. It trades about 0.08 of its potential returns per unit of risk. Austevoll Seafood ASA is currently generating about 0.06 per unit of risk. If you would invest  30,700  in Jaeren Sparebank on September 12, 2024 and sell it today you would earn a total of  1,800  from holding Jaeren Sparebank or generate 5.86% return on investment over 90 days.

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

Jaeren Sparebank  vs.  Austevoll Seafood ASA

Jaeren Sparebank

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Jaeren Sparebank are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Jaeren Sparebank is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Austevoll Seafood ASA

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Austevoll Seafood ASA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, Austevoll Seafood is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Jaeren Sparebank and Austevoll Seafood

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

The idea behind Jaeren Sparebank and Austevoll Seafood 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.