Correlation Between Icelandic Salmon and Arctic Fish
Can any of the company-specific risk be diversified away by investing in both Icelandic Salmon and Arctic Fish 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 Icelandic Salmon and Arctic Fish into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Icelandic Salmon As and Arctic Fish Holding, you can compare the effects of market volatilities on Icelandic Salmon and Arctic Fish 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 Icelandic Salmon with a short position of Arctic Fish. Check out your portfolio center. Please also check ongoing floating volatility patterns of Icelandic Salmon and Arctic Fish.
Diversification Opportunities for Icelandic Salmon and Arctic Fish
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Icelandic and Arctic is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Icelandic Salmon As and Arctic Fish Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arctic Fish Holding and Icelandic Salmon 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 Icelandic Salmon As are associated (or correlated) with Arctic Fish. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arctic Fish Holding has no effect on the direction of Icelandic Salmon i.e., Icelandic Salmon and Arctic Fish go up and down completely randomly.
Pair Corralation between Icelandic Salmon and Arctic Fish
Assuming the 90 days trading horizon Icelandic Salmon As is expected to under-perform the Arctic Fish. But the stock apears to be less risky and, when comparing its historical volatility, Icelandic Salmon As is 2.23 times less risky than Arctic Fish. The stock trades about -0.03 of its potential returns per unit of risk. The Arctic Fish Holding is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 7,200 in Arctic Fish Holding on September 1, 2024 and sell it today you would lose (100.00) from holding Arctic Fish Holding or give up 1.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Icelandic Salmon As vs. Arctic Fish Holding
Performance |
| Timeline |
| Icelandic Salmon |
| Arctic Fish Holding |
Icelandic Salmon and Arctic Fish Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Icelandic Salmon and Arctic Fish
The main advantage of trading using opposite Icelandic Salmon and Arctic Fish positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Icelandic Salmon position performs unexpectedly, Arctic Fish 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 Arctic Fish will offset losses from the drop in Arctic Fish's long position.| Icelandic Salmon vs. Ice Fish Farm | Icelandic Salmon vs. Arctic Fish Holding | Icelandic Salmon vs. Salmon Evolution Holding | Icelandic Salmon vs. Grieg Seafood ASA |
| Arctic Fish vs. Andfjord Salmon AS | Arctic Fish vs. Elkem ASA | Arctic Fish vs. Integrated Wind Solutions | Arctic Fish vs. Vow 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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