Correlation Between Clean Seas and 5Th Planet
Can any of the company-specific risk be diversified away by investing in both Clean Seas and 5Th Planet 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 Clean Seas and 5Th Planet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Clean Seas Seafood and 5Th Planet Games, you can compare the effects of market volatilities on Clean Seas and 5Th Planet 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 Clean Seas with a short position of 5Th Planet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clean Seas and 5Th Planet.
Diversification Opportunities for Clean Seas and 5Th Planet
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Clean and 5Th is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Clean Seas Seafood and 5Th Planet Games in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 5Th Planet Games and Clean Seas 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 Clean Seas Seafood are associated (or correlated) with 5Th Planet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 5Th Planet Games has no effect on the direction of Clean Seas i.e., Clean Seas and 5Th Planet go up and down completely randomly.
Pair Corralation between Clean Seas and 5Th Planet
Assuming the 90 days trading horizon Clean Seas Seafood is expected to generate 3.65 times more return on investment than 5Th Planet. However, Clean Seas is 3.65 times more volatile than 5Th Planet Games. It trades about 0.16 of its potential returns per unit of risk. 5Th Planet Games is currently generating about -0.12 per unit of risk. If you would invest 80.00 in Clean Seas Seafood on November 29, 2024 and sell it today you would earn a total of 20.00 from holding Clean Seas Seafood or generate 25.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Clean Seas Seafood vs. 5Th Planet Games
Performance |
| Timeline |
| Clean Seas Seafood |
| 5Th Planet Games |
Clean Seas and 5Th Planet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clean Seas and 5Th Planet
The main advantage of trading using opposite Clean Seas and 5Th Planet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clean Seas position performs unexpectedly, 5Th Planet 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 5Th Planet will offset losses from the drop in 5Th Planet's long position.| Clean Seas vs. Masoval AS | Clean Seas vs. Andfjord Salmon AS | Clean Seas vs. Arctic Fish Holding | Clean Seas vs. Ice Fish Farm |
| 5Th Planet vs. Solstad Offsho | 5Th Planet vs. Saga Pure ASA | 5Th Planet vs. REC Silicon ASA | 5Th Planet vs. Kongsberg Automotive Holding |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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