Correlation Between Otello ASA and Mowi ASA
Can any of the company-specific risk be diversified away by investing in both Otello ASA and Mowi 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 Otello ASA and Mowi ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Otello ASA and Mowi ASA, you can compare the effects of market volatilities on Otello ASA and Mowi 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 Otello ASA with a short position of Mowi ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Otello ASA and Mowi ASA.
Diversification Opportunities for Otello ASA and Mowi ASA
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Otello and Mowi is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Otello ASA and Mowi ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mowi ASA and Otello 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 Otello ASA are associated (or correlated) with Mowi ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mowi ASA has no effect on the direction of Otello ASA i.e., Otello ASA and Mowi ASA go up and down completely randomly.
Pair Corralation between Otello ASA and Mowi ASA
Assuming the 90 days trading horizon Otello ASA is expected to under-perform the Mowi ASA. But the stock apears to be less risky and, when comparing its historical volatility, Otello ASA is 1.22 times less risky than Mowi ASA. The stock trades about -0.1 of its potential returns per unit of risk. The Mowi ASA is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 18,759 in Mowi ASA on September 1, 2024 and sell it today you would earn a total of 1,281 from holding Mowi ASA or generate 6.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Otello ASA vs. Mowi ASA
Performance |
| Timeline |
| Otello ASA |
| Mowi ASA |
Otello ASA and Mowi ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Otello ASA and Mowi ASA
The main advantage of trading using opposite Otello ASA and Mowi ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Otello ASA position performs unexpectedly, Mowi 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 Mowi ASA will offset losses from the drop in Mowi ASA's long position.| Otello ASA vs. Kid ASA | Otello ASA vs. Selvaag Bolig ASA | Otello ASA vs. Wallenius Wilhelmsen Logistics | Otello ASA vs. Elkem 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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