Correlation Between Salmon Evolution and Icelandic Salmon

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

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

Diversification Opportunities for Salmon Evolution and Icelandic Salmon

-0.08

Correlation Coefficient

Salmon Evolution  Icelandic Salmon

Good diversification

The 3 months correlation between Salmon and Icelandic is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Salmon Evolution Holding and Icelandic Salmon As in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icelandic Salmon and Salmon Evolution 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 Salmon Evolution Holding are associated (or correlated) with Icelandic Salmon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icelandic Salmon has no effect on the direction of Salmon Evolution i.e., Salmon Evolution and Icelandic Salmon go up and down completely randomly.

Pair Corralation between Salmon Evolution and Icelandic Salmon

Assuming the 90 days trading horizon Salmon Evolution is expected to generate 5.04 times less return on investment than Icelandic Salmon. But when comparing it to its historical volatility, Salmon Evolution Holding is 1.52 times less risky than Icelandic Salmon. It trades about 0.02 of its potential returns per unit of risk. Icelandic Salmon As is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  10,900  in Icelandic Salmon As on September 4, 2024 and sell it today you would earn a total of  1,100  from holding Icelandic Salmon As or generate 10.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Salmon Evolution Holding  vs.  Icelandic Salmon As

Salmon Evolution Holding

Risk-Adjusted Performance

1 of 100

Weak

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

Icelandic Salmon

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Icelandic Salmon As are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Icelandic Salmon may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Salmon Evolution and Icelandic Salmon

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

The idea behind Salmon Evolution Holding and Icelandic Salmon As 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.