Correlation Between ADS Maritime and Shelf Drilling
Can any of the company-specific risk be diversified away by investing in both ADS Maritime and Shelf Drilling 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 ADS Maritime and Shelf Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ADS Maritime Holding and Shelf Drilling, you can compare the effects of market volatilities on ADS Maritime and Shelf Drilling 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 ADS Maritime with a short position of Shelf Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of ADS Maritime and Shelf Drilling.
Diversification Opportunities for ADS Maritime and Shelf Drilling
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between ADS and Shelf is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding ADS Maritime Holding and Shelf Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shelf Drilling and ADS Maritime 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 ADS Maritime Holding are associated (or correlated) with Shelf Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shelf Drilling has no effect on the direction of ADS Maritime i.e., ADS Maritime and Shelf Drilling go up and down completely randomly.
Pair Corralation between ADS Maritime and Shelf Drilling
Assuming the 90 days trading horizon ADS Maritime Holding is expected to generate 0.66 times more return on investment than Shelf Drilling. However, ADS Maritime Holding is 1.51 times less risky than Shelf Drilling. It trades about 0.0 of its potential returns per unit of risk. Shelf Drilling is currently generating about -0.06 per unit of risk. If you would invest 217.00 in ADS Maritime Holding on September 12, 2024 and sell it today you would lose (15.00) from holding ADS Maritime Holding or give up 6.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ADS Maritime Holding vs. Shelf Drilling
Performance |
| Timeline |
| ADS Maritime Holding |
| Shelf Drilling |
ADS Maritime and Shelf Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ADS Maritime and Shelf Drilling
The main advantage of trading using opposite ADS Maritime and Shelf Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ADS Maritime position performs unexpectedly, Shelf Drilling 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 Shelf Drilling will offset losses from the drop in Shelf Drilling's long position.| ADS Maritime vs. Havila Shipping ASA | ADS Maritime vs. Shelf Drilling | ADS Maritime vs. Solstad Offsho | ADS Maritime vs. Eidesvik Offshore ASA |
| Shelf Drilling vs. Odfjell Drilling | Shelf Drilling vs. NorAm Drilling AS | Shelf Drilling vs. SD Standard Drilling | Shelf Drilling vs. Kongsberg Gruppen 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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