Correlation Between GM and Austevoll Seafood
Can any of the company-specific risk be diversified away by investing in both GM and Austevoll Seafood 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 GM and Austevoll Seafood into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Austevoll Seafood ASA, you can compare the effects of market volatilities on GM and Austevoll Seafood 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 GM with a short position of Austevoll Seafood. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Austevoll Seafood.
Diversification Opportunities for GM and Austevoll Seafood
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between GM and Austevoll is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Austevoll Seafood ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Austevoll Seafood ASA and GM 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 General Motors are associated (or correlated) with Austevoll Seafood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Austevoll Seafood ASA has no effect on the direction of GM i.e., GM and Austevoll Seafood go up and down completely randomly.
Pair Corralation between GM and Austevoll Seafood
Allowing for the 90-day total investment horizon GM is expected to generate 1.46 times less return on investment than Austevoll Seafood. In addition to that, GM is 1.43 times more volatile than Austevoll Seafood ASA. It trades about 0.06 of its total potential returns per unit of risk. Austevoll Seafood ASA is currently generating about 0.13 per unit of volatility. If you would invest 7,220 in Austevoll Seafood ASA on November 5, 2024 and sell it today you would earn a total of 3,840 from holding Austevoll Seafood ASA or generate 53.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.19% |
| Values | Daily Returns |
General Motors vs. Austevoll Seafood ASA
Performance |
| Timeline |
| General Motors |
| Austevoll Seafood ASA |
GM and Austevoll Seafood Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Austevoll Seafood
The main advantage of trading using opposite GM and Austevoll Seafood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Austevoll Seafood 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 Austevoll Seafood will offset losses from the drop in Austevoll Seafood's long position.The idea behind General Motors and Austevoll Seafood ASA 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.| Austevoll Seafood vs. Lery Seafood Group | Austevoll Seafood vs. Grieg Seafood ASA | Austevoll Seafood vs. SalMar ASA | Austevoll Seafood vs. Pf Bakkafrost |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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