Correlation Between AUSTEVOLL SEAFOOD and Ensign

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

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

Diversification Opportunities for AUSTEVOLL SEAFOOD and Ensign

-0.02

Correlation Coefficient

AUSTEVOLL SEAFOOD  Ensign

Good diversification

The 3 months correlation between AUSTEVOLL and Ensign is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding AUSTEVOLL SEAFOOD and The Ensign Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ensign Group 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 Ensign. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ensign Group has no effect on the direction of AUSTEVOLL SEAFOOD i.e., AUSTEVOLL SEAFOOD and Ensign go up and down completely randomly.

Pair Corralation between AUSTEVOLL SEAFOOD and Ensign

Assuming the 90 days trading horizon AUSTEVOLL SEAFOOD is expected to generate 0.79 times more return on investment than Ensign. However, AUSTEVOLL SEAFOOD is 1.26 times less risky than Ensign. It trades about 0.11 of its potential returns per unit of risk. The Ensign Group is currently generating about 0.04 per unit of risk. If you would invest  782.00  in AUSTEVOLL SEAFOOD on September 5, 2024 and sell it today you would earn a total of  79.00  from holding AUSTEVOLL SEAFOOD or generate 10.1% return on investment over 90 days.

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

AUSTEVOLL SEAFOOD  vs.  The Ensign Group

AUSTEVOLL SEAFOOD

Risk-Adjusted Performance

8 of 100

OK

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

Ensign Group

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in The Ensign Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Ensign 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 Ensign

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

The idea behind AUSTEVOLL SEAFOOD and The Ensign Group 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.

Check out your portfolio center.

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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.