Correlation Between Archer Daniels and SalMar ASA
Can any of the company-specific risk be diversified away by investing in both Archer Daniels and SalMar ASA 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 Archer Daniels and SalMar ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Archer Daniels Midland and SalMar ASA, you can compare the effects of market volatilities on Archer Daniels and SalMar ASA 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 Archer Daniels with a short position of SalMar ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Archer Daniels and SalMar ASA.
Diversification Opportunities for Archer Daniels and SalMar ASA
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Archer and SalMar is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Archer Daniels Midland and SalMar ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SalMar ASA and Archer Daniels 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 Archer Daniels Midland are associated (or correlated) with SalMar ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SalMar ASA has no effect on the direction of Archer Daniels i.e., Archer Daniels and SalMar ASA go up and down completely randomly.
Pair Corralation between Archer Daniels and SalMar ASA
Assuming the 90 days trading horizon Archer Daniels Midland is expected to generate 0.81 times more return on investment than SalMar ASA. However, Archer Daniels Midland is 1.23 times less risky than SalMar ASA. It trades about -0.04 of its potential returns per unit of risk. SalMar ASA is currently generating about -0.07 per unit of risk. If you would invest 5,483 in Archer Daniels Midland on September 24, 2024 and sell it today you would lose (639.00) from holding Archer Daniels Midland or give up 11.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Archer Daniels Midland vs. SalMar ASA
Performance |
| Timeline |
| Archer Daniels Midland |
| SalMar ASA |
Archer Daniels and SalMar ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Archer Daniels and SalMar ASA
The main advantage of trading using opposite Archer Daniels and SalMar ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Archer Daniels position performs unexpectedly, SalMar ASA 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 SalMar ASA will offset losses from the drop in SalMar ASA's long position.| Archer Daniels vs. Tyson Foods | Archer Daniels vs. Wilmar International Limited | Archer Daniels vs. MOWI ASA SPADR | Archer Daniels vs. Mowi ASA |
| SalMar ASA vs. Salesforce | SalMar ASA vs. Insteel Industries | SalMar ASA vs. Lamar Advertising | SalMar ASA vs. MUTUIONLINE |
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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