Correlation Between Austevoll Seafood and WESTERN DIGITAL

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

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

Diversification Opportunities for Austevoll Seafood and WESTERN DIGITAL

0.68

Correlation Coefficient

Austevoll Seafood  WESTERN DIGITAL

Poor diversification

The 3 months correlation between Austevoll and WESTERN is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Austevoll Seafood ASA and WESTERN DIGITAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WESTERN DIGITAL and Austevoll Seafood 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 Austevoll Seafood ASA are associated (or correlated) with WESTERN DIGITAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WESTERN DIGITAL has no effect on the direction of Austevoll Seafood i.e., Austevoll Seafood and WESTERN DIGITAL go up and down completely randomly.

Pair Corralation between Austevoll Seafood and WESTERN DIGITAL

Assuming the 90 days horizon Austevoll Seafood ASA is expected to generate 3.21 times more return on investment than WESTERN DIGITAL. However, Austevoll Seafood is 3.21 times more volatile than WESTERN DIGITAL. It trades about 0.09 of its potential returns per unit of risk. WESTERN DIGITAL is currently generating about 0.08 per unit of risk. If you would invest  265.00  in Austevoll Seafood ASA on September 4, 2024 and sell it today you would earn a total of  590.00  from holding Austevoll Seafood ASA or generate 222.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.6%
Values	Daily Returns

Austevoll Seafood ASA  vs.  WESTERN DIGITAL

Austevoll Seafood ASA

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Austevoll Seafood ASA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Austevoll Seafood may actually be approaching a critical reversion point that can send shares even higher in January 2025.

WESTERN DIGITAL

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in WESTERN DIGITAL are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, WESTERN DIGITAL exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Austevoll Seafood and WESTERN DIGITAL

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

The idea behind Austevoll Seafood ASA and WESTERN DIGITAL 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.