Correlation Between Arctic Fish and Salmon Evolution

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

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

Diversification Opportunities for Arctic Fish and Salmon Evolution

0.03

Correlation Coefficient

Arctic Fish  Salmon Evolution

Significant diversification

The 3 months correlation between Arctic and Salmon is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Arctic Fish Holding and Salmon Evolution Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salmon Evolution Holding and Arctic Fish 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 Arctic Fish Holding are associated (or correlated) with Salmon Evolution. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salmon Evolution Holding has no effect on the direction of Arctic Fish i.e., Arctic Fish and Salmon Evolution go up and down completely randomly.

Pair Corralation between Arctic Fish and Salmon Evolution

Assuming the 90 days trading horizon Arctic Fish Holding is expected to under-perform the Salmon Evolution. In addition to that, Arctic Fish is 3.5 times more volatile than Salmon Evolution Holding. It trades about -0.09 of its total potential returns per unit of risk. Salmon Evolution Holding is currently generating about 0.0 per unit of volatility. If you would invest  615.00  in Salmon Evolution Holding on April 24, 2025 and sell it today you would lose (4.00) from holding Salmon Evolution Holding or give up 0.65% of portfolio value over 90 days.

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

Arctic Fish Holding  vs.  Salmon Evolution Holding

Arctic Fish Holding

Risk-Adjusted Performance

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 conflicting performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in August 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Salmon Evolution Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days Salmon Evolution Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Salmon Evolution is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Arctic Fish and Salmon Evolution

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

The idea behind Arctic Fish Holding and Salmon Evolution 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.