Correlation Between Pf Bakkafrost and Vow ASA
Can any of the company-specific risk be diversified away by investing in both Pf Bakkafrost and Vow 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 Pf Bakkafrost and Vow ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pf Bakkafrost and Vow ASA, you can compare the effects of market volatilities on Pf Bakkafrost and Vow 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 Pf Bakkafrost with a short position of Vow ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pf Bakkafrost and Vow ASA.
Diversification Opportunities for Pf Bakkafrost and Vow ASA
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between BAKKA and Vow is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Pf Bakkafrost and Vow ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vow ASA and Pf Bakkafrost 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 Pf Bakkafrost are associated (or correlated) with Vow ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vow ASA has no effect on the direction of Pf Bakkafrost i.e., Pf Bakkafrost and Vow ASA go up and down completely randomly.
Pair Corralation between Pf Bakkafrost and Vow ASA
Assuming the 90 days trading horizon Pf Bakkafrost is expected to under-perform the Vow ASA. But the stock apears to be less risky and, when comparing its historical volatility, Pf Bakkafrost is 2.83 times less risky than Vow ASA. The stock trades about -0.22 of its potential returns per unit of risk. The Vow ASA is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 633.00 in Vow ASA on March 31, 2024 and sell it today you would earn a total of 56.00 from holding Vow ASA or generate 8.85% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Pf Bakkafrost vs. Vow ASA
Performance |
Timeline |
Pf Bakkafrost |
Vow ASA |
Pf Bakkafrost and Vow ASA Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Pf Bakkafrost and Vow ASA
The main advantage of trading using opposite Pf Bakkafrost and Vow ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pf Bakkafrost position performs unexpectedly, Vow 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 Vow ASA will offset losses from the drop in Vow ASA's long position.The idea behind Pf Bakkafrost and Vow 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.Vow ASA vs. Kongsberg Gruppen ASA | Vow ASA vs. Scatec Solar OL | Vow ASA vs. Solstad Offsho | Vow ASA vs. Arcticzymes Technologies 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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