Correlation Between Nel ASA and Mowi ASA

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

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

Diversification Opportunities for Nel ASA and Mowi ASA

-0.87

Correlation Coefficient

Nel ASA  Mowi ASA

Pay attention - limited upside

The 3 months correlation between Nel and Mowi is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Nel ASA and Mowi ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mowi ASA and Nel ASA 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 Nel ASA are associated (or correlated) with Mowi ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mowi ASA has no effect on the direction of Nel ASA i.e., Nel ASA and Mowi ASA go up and down completely randomly.

Pair Corralation between Nel ASA and Mowi ASA

Assuming the 90 days trading horizon Nel ASA is expected to under-perform the Mowi ASA. In addition to that, Nel ASA is 3.05 times more volatile than Mowi ASA. It trades about -0.21 of its total potential returns per unit of risk. Mowi ASA is currently generating about 0.14 per unit of volatility. If you would invest  17,936  in Mowi ASA on September 3, 2024 and sell it today you would earn a total of  2,104  from holding Mowi ASA or generate 11.73% return on investment over 90 days.

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

Nel ASA  vs.  Mowi ASA

Nel ASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nel ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Mowi ASA

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mowi ASA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Mowi ASA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Nel ASA and Mowi ASA

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

The idea behind Nel ASA and Mowi 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.