Correlation Between Mowi ASA and Equinor ASA

Can any of the company-specific risk be diversified away by investing in both Mowi ASA and Equinor 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 Mowi ASA and Equinor ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mowi ASA and Equinor ASA, you can compare the effects of market volatilities on Mowi ASA and Equinor 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 Mowi ASA with a short position of Equinor ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mowi ASA and Equinor ASA.

Diversification Opportunities for Mowi ASA and Equinor ASA

-0.59

Correlation Coefficient

Mowi ASA  Equinor ASA

Excellent diversification

The 3 months correlation between Mowi and Equinor is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Mowi ASA and Equinor ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equinor ASA and Mowi 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 Mowi ASA are associated (or correlated) with Equinor ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equinor ASA has no effect on the direction of Mowi ASA i.e., Mowi ASA and Equinor ASA go up and down completely randomly.

Pair Corralation between Mowi ASA and Equinor ASA

Assuming the 90 days trading horizon Mowi ASA is expected to generate 0.8 times more return on investment than Equinor ASA. However, Mowi ASA is 1.26 times less risky than Equinor ASA. It trades about 0.0 of its potential returns per unit of risk. Equinor ASA is currently generating about -0.01 per unit of risk. If you would invest  19,450  in Mowi ASA on February 4, 2024 and sell it today you would lose (40.00) from holding Mowi ASA or give up 0.21% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Mowi ASA  vs.  Equinor ASA

Mowi ASA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mowi ASA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Mowi ASA is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Equinor ASA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Equinor ASA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Equinor ASA is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Mowi ASA and Equinor ASA

The main advantage of trading using opposite Mowi ASA and Equinor ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mowi ASA position performs unexpectedly, Equinor 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 Equinor ASA will offset losses from the drop in Equinor ASA's long position.

The idea behind Mowi ASA and Equinor 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.

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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.