Correlation Between Norwegian Air and Grieg Seafood

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

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

Diversification Opportunities for Norwegian Air and Grieg Seafood

-0.66

Correlation Coefficient

Norwegian Air  Grieg Seafood

Excellent diversification

The 3 months correlation between Norwegian and Grieg is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Norwegian Air Shuttle and Grieg Seafood ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grieg Seafood ASA and Norwegian Air 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 Norwegian Air Shuttle are associated (or correlated) with Grieg Seafood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grieg Seafood ASA has no effect on the direction of Norwegian Air i.e., Norwegian Air and Grieg Seafood go up and down completely randomly.

Pair Corralation between Norwegian Air and Grieg Seafood

Assuming the 90 days trading horizon Norwegian Air is expected to generate 5.11 times less return on investment than Grieg Seafood. In addition to that, Norwegian Air is 1.38 times more volatile than Grieg Seafood ASA. It trades about 0.01 of its total potential returns per unit of risk. Grieg Seafood ASA is currently generating about 0.1 per unit of volatility. If you would invest  5,725  in Grieg Seafood ASA on September 14, 2024 and sell it today you would earn a total of  840.00  from holding Grieg Seafood ASA or generate 14.67% return on investment over 90 days.

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

Norwegian Air Shuttle  vs.  Grieg Seafood ASA

Norwegian Air Shuttle

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Norwegian Air Shuttle are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Norwegian Air is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Grieg Seafood ASA

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Grieg Seafood ASA are ranked lower than 8 (%) 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.

Pair Trading with Norwegian Air and Grieg Seafood

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

The idea behind Norwegian Air Shuttle and Grieg 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.