Correlation Between Grieg Seafood and Sovereign Metals
Can any of the company-specific risk be diversified away by investing in both Grieg Seafood and Sovereign Metals 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 Grieg Seafood and Sovereign Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grieg Seafood and Sovereign Metals, you can compare the effects of market volatilities on Grieg Seafood and Sovereign Metals 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 Grieg Seafood with a short position of Sovereign Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grieg Seafood and Sovereign Metals.
Diversification Opportunities for Grieg Seafood and Sovereign Metals
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Grieg and Sovereign is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Grieg Seafood and Sovereign Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sovereign Metals and Grieg 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 Grieg Seafood are associated (or correlated) with Sovereign Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sovereign Metals has no effect on the direction of Grieg Seafood i.e., Grieg Seafood and Sovereign Metals go up and down completely randomly.
Pair Corralation between Grieg Seafood and Sovereign Metals
Assuming the 90 days trading horizon Grieg Seafood is expected to under-perform the Sovereign Metals. In addition to that, Grieg Seafood is 1.38 times more volatile than Sovereign Metals. It trades about -0.13 of its total potential returns per unit of risk. Sovereign Metals is currently generating about 0.09 per unit of volatility. If you would invest 3,900 in Sovereign Metals on September 2, 2024 and sell it today you would earn a total of 150.00 from holding Sovereign Metals or generate 3.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grieg Seafood vs. Sovereign Metals
Performance |
| Timeline |
| Grieg Seafood |
| Sovereign Metals |
Grieg Seafood and Sovereign Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grieg Seafood and Sovereign Metals
The main advantage of trading using opposite Grieg Seafood and Sovereign Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grieg Seafood position performs unexpectedly, Sovereign Metals 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 Sovereign Metals will offset losses from the drop in Sovereign Metals' long position.| Grieg Seafood vs. Uniper SE | Grieg Seafood vs. Mulberry Group PLC | Grieg Seafood vs. London Security Plc | Grieg Seafood vs. Triad Group PLC |
| Sovereign Metals vs. Axway Software SA | Sovereign Metals vs. Verizon Communications | Sovereign Metals vs. InterContinental Hotels Group | Sovereign Metals vs. Take Two Interactive Software |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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