Correlation Between Tomra Systems and Arctic Fish

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

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

Diversification Opportunities for Tomra Systems and Arctic Fish

-0.75

Correlation Coefficient

Tomra Systems  Arctic Fish

Pay attention - limited upside

The 3 months correlation between Tomra and Arctic is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Tomra Systems ASA 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 Tomra Systems 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 Tomra Systems ASA 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 Tomra Systems i.e., Tomra Systems and Arctic Fish go up and down completely randomly.

Pair Corralation between Tomra Systems and Arctic Fish

Assuming the 90 days trading horizon Tomra Systems ASA is expected to generate 0.8 times more return on investment than Arctic Fish. However, Tomra Systems ASA is 1.25 times less risky than Arctic Fish. It trades about 0.0 of its potential returns per unit of risk. Arctic Fish Holding is currently generating about 0.0 per unit of risk. If you would invest  16,687  in Tomra Systems ASA on January 31, 2024 and sell it today you would lose (3,017) from holding Tomra Systems ASA or give up 18.08% of portfolio value over 90 days.

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

Tomra Systems ASA  vs.  Arctic Fish Holding

Tomra Systems ASA

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tomra Systems ASA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting primary indicators, Tomra Systems disclosed solid returns over the last few months and may actually be approaching a breakup point.

Arctic Fish Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arctic Fish Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's technical indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Tomra Systems and Arctic Fish

The main advantage of trading using opposite Tomra Systems and Arctic Fish positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tomra Systems 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.

The idea behind Tomra Systems ASA and Arctic Fish Holding 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.