Correlation Between International Consolidated and SalMar ASA
Can any of the company-specific risk be diversified away by investing in both International Consolidated 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 International Consolidated and SalMar ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Consolidated Airlines and SalMar ASA, you can compare the effects of market volatilities on International Consolidated 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 International Consolidated with a short position of SalMar ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Consolidated and SalMar ASA.
Diversification Opportunities for International Consolidated and SalMar ASA
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between International and SalMar is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding International Consolidated Air and SalMar ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SalMar ASA and International Consolidated 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 International Consolidated Airlines 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 International Consolidated i.e., International Consolidated and SalMar ASA go up and down completely randomly.
Pair Corralation between International Consolidated and SalMar ASA
Assuming the 90 days horizon International Consolidated Airlines is expected to generate 1.29 times more return on investment than SalMar ASA. However, International Consolidated is 1.29 times more volatile than SalMar ASA. It trades about 0.28 of its potential returns per unit of risk. SalMar ASA is currently generating about 0.06 per unit of risk. If you would invest 212.00 in International Consolidated Airlines on September 2, 2024 and sell it today you would earn a total of 99.00 from holding International Consolidated Airlines or generate 46.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Consolidated Air vs. SalMar ASA
Performance |
| Timeline |
| International Consolidated |
| SalMar ASA |
International Consolidated and SalMar ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Consolidated and SalMar ASA
The main advantage of trading using opposite International Consolidated and SalMar ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Consolidated 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.| International Consolidated vs. ELECTRONIC ARTS | International Consolidated vs. ON SEMICONDUCTOR | International Consolidated vs. Ultra Clean Holdings | International Consolidated vs. Electronic Arts |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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