Correlation Between Neometals and Grieg Seafood

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

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

Diversification Opportunities for Neometals and Grieg Seafood

0.07

Correlation Coefficient

Neometals  Grieg Seafood

Significant diversification

The 3 months correlation between Neometals and Grieg is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Neometals and Grieg Seafood in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grieg Seafood and Neometals 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 Neometals 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 has no effect on the direction of Neometals i.e., Neometals and Grieg Seafood go up and down completely randomly.

Pair Corralation between Neometals and Grieg Seafood

Assuming the 90 days trading horizon Neometals is expected to under-perform the Grieg Seafood. In addition to that, Neometals is 1.76 times more volatile than Grieg Seafood. It trades about -0.09 of its total potential returns per unit of risk. Grieg Seafood is currently generating about 0.0 per unit of volatility. If you would invest  7,028  in Grieg Seafood on September 12, 2024 and sell it today you would lose (695.00) from holding Grieg Seafood or give up 9.89% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Neometals  vs.  Grieg Seafood

Neometals

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Neometals are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Neometals exhibited solid returns over the last few months and may actually be approaching a breakup point.

Grieg Seafood

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Grieg Seafood are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Grieg Seafood unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Neometals and Grieg Seafood

The main advantage of trading using opposite Neometals and Grieg Seafood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Neometals 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 Neometals and Grieg Seafood 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.

Check out your portfolio center.

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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.