Correlation Between Ice Fish and Elkem ASA
Can any of the company-specific risk be diversified away by investing in both Ice Fish and Elkem 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 Ice Fish and Elkem ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ice Fish Farm and Elkem ASA, you can compare the effects of market volatilities on Ice Fish and Elkem 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 Ice Fish with a short position of Elkem ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ice Fish and Elkem ASA.
Diversification Opportunities for Ice Fish and Elkem ASA
Good diversification
The 3 months correlation between Ice and Elkem is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Ice Fish Farm and Elkem ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elkem ASA and Ice Fish 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 Ice Fish Farm are associated (or correlated) with Elkem ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elkem ASA has no effect on the direction of Ice Fish i.e., Ice Fish and Elkem ASA go up and down completely randomly.
Pair Corralation between Ice Fish and Elkem ASA
Assuming the 90 days trading horizon Ice Fish Farm is expected to generate 2.5 times more return on investment than Elkem ASA. However, Ice Fish is 2.5 times more volatile than Elkem ASA. It trades about 0.09 of its potential returns per unit of risk. Elkem ASA is currently generating about 0.01 per unit of risk. If you would invest 2,400 in Ice Fish Farm on August 25, 2024 and sell it today you would earn a total of 420.00 from holding Ice Fish Farm or generate 17.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ice Fish Farm vs. Elkem ASA
Performance |
| Timeline |
| Ice Fish Farm |
| Elkem ASA |
Ice Fish and Elkem ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ice Fish and Elkem ASA
The main advantage of trading using opposite Ice Fish and Elkem ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ice Fish position performs unexpectedly, Elkem 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 Elkem ASA will offset losses from the drop in Elkem ASA's long position.| Ice Fish vs. Andfjord Salmon AS | Ice Fish vs. Arctic Fish Holding | Ice Fish vs. Elkem ASA | Ice Fish vs. Vow ASA |
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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