Correlation Between Elkem ASA and Icelandic Salmon
Can any of the company-specific risk be diversified away by investing in both Elkem ASA and Icelandic Salmon 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 Elkem ASA and Icelandic Salmon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elkem ASA and Icelandic Salmon As, you can compare the effects of market volatilities on Elkem ASA and Icelandic Salmon 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 Elkem ASA with a short position of Icelandic Salmon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elkem ASA and Icelandic Salmon.
Diversification Opportunities for Elkem ASA and Icelandic Salmon
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Elkem and Icelandic is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Elkem ASA and Icelandic Salmon As in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icelandic Salmon and Elkem ASA 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 Elkem ASA are associated (or correlated) with Icelandic Salmon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icelandic Salmon has no effect on the direction of Elkem ASA i.e., Elkem ASA and Icelandic Salmon go up and down completely randomly.
Pair Corralation between Elkem ASA and Icelandic Salmon
Assuming the 90 days trading horizon Elkem ASA is expected to under-perform the Icelandic Salmon. But the stock apears to be less risky and, when comparing its historical volatility, Elkem ASA is 1.28 times less risky than Icelandic Salmon. The stock trades about -0.06 of its potential returns per unit of risk. The Icelandic Salmon As is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 12,100 in Icelandic Salmon As on August 29, 2024 and sell it today you would lose (200.00) from holding Icelandic Salmon As or give up 1.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elkem ASA vs. Icelandic Salmon As
Performance |
| Timeline |
| Elkem ASA |
| Icelandic Salmon |
Elkem ASA and Icelandic Salmon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elkem ASA and Icelandic Salmon
The main advantage of trading using opposite Elkem ASA and Icelandic Salmon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elkem ASA position performs unexpectedly, Icelandic Salmon 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 Icelandic Salmon will offset losses from the drop in Icelandic Salmon's long position.| Elkem ASA vs. Storebrand ASA | Elkem ASA vs. Yara International ASA | Elkem ASA vs. Lery Seafood Group | Elkem ASA vs. DnB ASA |
| Icelandic Salmon vs. Masoval AS | Icelandic Salmon vs. Arctic Fish Holding | Icelandic Salmon vs. Ice Fish Farm | Icelandic Salmon vs. Elkem ASA |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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