Correlation Between AUSTEVOLL SEAFOOD and Evolution

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

By analyzing existing cross correlation between AUSTEVOLL SEAFOOD and Evolution AB, you can compare the effects of market volatilities on AUSTEVOLL SEAFOOD and Evolution 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 Evolution. Check out your portfolio center. Please also check ongoing floating volatility patterns of AUSTEVOLL SEAFOOD and Evolution.

Diversification Opportunities for AUSTEVOLL SEAFOOD and Evolution

-0.54

Correlation Coefficient

AUSTEVOLL SEAFOOD  Evolution

Excellent diversification

The 3 months correlation between AUSTEVOLL and Evolution is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding AUSTEVOLL SEAFOOD and Evolution AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolution AB 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 are associated (or correlated) with Evolution. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolution AB has no effect on the direction of AUSTEVOLL SEAFOOD i.e., AUSTEVOLL SEAFOOD and Evolution go up and down completely randomly.

Pair Corralation between AUSTEVOLL SEAFOOD and Evolution

Assuming the 90 days trading horizon AUSTEVOLL SEAFOOD is expected to generate 2.95 times more return on investment than Evolution. However, AUSTEVOLL SEAFOOD is 2.95 times more volatile than Evolution AB. It trades about 0.05 of its potential returns per unit of risk. Evolution AB is currently generating about 0.01 per unit of risk. If you would invest  371.00  in AUSTEVOLL SEAFOOD on September 12, 2024 and sell it today you would earn a total of  476.00  from holding AUSTEVOLL SEAFOOD or generate 128.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

AUSTEVOLL SEAFOOD  vs.  Evolution AB

AUSTEVOLL SEAFOOD

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AUSTEVOLL SEAFOOD are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, AUSTEVOLL SEAFOOD may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Evolution AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Evolution AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Evolution is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with AUSTEVOLL SEAFOOD and Evolution

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

The idea behind AUSTEVOLL SEAFOOD and Evolution AB 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.