Correlation Between SeaBird Exploration and Hofseth Biocare

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Can any of the company-specific risk be diversified away by investing in both SeaBird Exploration and Hofseth Biocare 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 SeaBird Exploration and Hofseth Biocare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SeaBird Exploration Plc and Hofseth Biocare ASA, you can compare the effects of market volatilities on SeaBird Exploration and Hofseth Biocare 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 SeaBird Exploration with a short position of Hofseth Biocare. Check out your portfolio center. Please also check ongoing floating volatility patterns of SeaBird Exploration and Hofseth Biocare.

Diversification Opportunities for SeaBird Exploration and Hofseth Biocare

-0.74
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between SeaBird and Hofseth is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding SeaBird Exploration Plc and Hofseth Biocare ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hofseth Biocare ASA and SeaBird Exploration 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 SeaBird Exploration Plc are associated (or correlated) with Hofseth Biocare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hofseth Biocare ASA has no effect on the direction of SeaBird Exploration i.e., SeaBird Exploration and Hofseth Biocare go up and down completely randomly.

Pair Corralation between SeaBird Exploration and Hofseth Biocare

Assuming the 90 days trading horizon SeaBird Exploration Plc is expected to generate 0.34 times more return on investment than Hofseth Biocare. However, SeaBird Exploration Plc is 2.98 times less risky than Hofseth Biocare. It trades about 0.2 of its potential returns per unit of risk. Hofseth Biocare ASA is currently generating about -0.15 per unit of risk. If you would invest  481.00  in SeaBird Exploration Plc on September 4, 2024 and sell it today you would earn a total of  92.00  from holding SeaBird Exploration Plc or generate 19.13% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

SeaBird Exploration Plc  vs.  Hofseth Biocare ASA

 Performance 
       Timeline  
SeaBird Exploration Plc 

Risk-Adjusted Performance

15 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in SeaBird Exploration Plc are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, SeaBird Exploration disclosed solid returns over the last few months and may actually be approaching a breakup point.
Hofseth Biocare ASA 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Hofseth Biocare ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental 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.

SeaBird Exploration and Hofseth Biocare Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with SeaBird Exploration and Hofseth Biocare

The main advantage of trading using opposite SeaBird Exploration and Hofseth Biocare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SeaBird Exploration position performs unexpectedly, Hofseth Biocare 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 Hofseth Biocare will offset losses from the drop in Hofseth Biocare's long position.
The idea behind SeaBird Exploration Plc and Hofseth Biocare 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.

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