Correlation Between Shelf Drilling and Grieg Seafood

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

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

Diversification Opportunities for Shelf Drilling and Grieg Seafood

-0.25

Correlation Coefficient

Shelf Drilling  Grieg Seafood

Very good diversification

The 3 months correlation between Shelf and Grieg is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Shelf Drilling 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 Shelf Drilling 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 Shelf Drilling 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 Shelf Drilling i.e., Shelf Drilling and Grieg Seafood go up and down completely randomly.

Pair Corralation between Shelf Drilling and Grieg Seafood

Assuming the 90 days trading horizon Shelf Drilling is expected to under-perform the Grieg Seafood. In addition to that, Shelf Drilling is 2.05 times more volatile than Grieg Seafood ASA. It trades about -0.16 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	Insignificant
Accuracy	98.46%
Values	Daily Returns

Shelf Drilling  vs.  Grieg Seafood ASA

Shelf Drilling

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shelf Drilling 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 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.

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 Shelf Drilling and Grieg Seafood

The main advantage of trading using opposite Shelf Drilling and Grieg Seafood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shelf Drilling 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 Shelf Drilling 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.