Correlation Between AF Gruppen and American Shipping
Can any of the company-specific risk be diversified away by investing in both AF Gruppen and American Shipping 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 AF Gruppen and American Shipping into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AF Gruppen ASA and American Shipping, you can compare the effects of market volatilities on AF Gruppen and American Shipping 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 AF Gruppen with a short position of American Shipping. Check out your portfolio center. Please also check ongoing floating volatility patterns of AF Gruppen and American Shipping.
Diversification Opportunities for AF Gruppen and American Shipping
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between AFG and American is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding AF Gruppen ASA and American Shipping in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Shipping and AF Gruppen 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 AF Gruppen ASA are associated (or correlated) with American Shipping. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Shipping has no effect on the direction of AF Gruppen i.e., AF Gruppen and American Shipping go up and down completely randomly.
Pair Corralation between AF Gruppen and American Shipping
Assuming the 90 days trading horizon AF Gruppen ASA is expected to generate 0.45 times more return on investment than American Shipping. However, AF Gruppen ASA is 2.21 times less risky than American Shipping. It trades about 0.24 of its potential returns per unit of risk. American Shipping is currently generating about 0.1 per unit of risk. If you would invest 13,000 in AF Gruppen ASA on August 29, 2024 and sell it today you would earn a total of 780.00 from holding AF Gruppen ASA or generate 6.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AF Gruppen ASA vs. American Shipping
Performance |
| Timeline |
| AF Gruppen ASA |
| American Shipping |
AF Gruppen and American Shipping Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AF Gruppen and American Shipping
The main advantage of trading using opposite AF Gruppen and American Shipping positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AF Gruppen position performs unexpectedly, American Shipping 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 American Shipping will offset losses from the drop in American Shipping's long position.| AF Gruppen vs. Veidekke ASA | AF Gruppen vs. Gjensidige Forsikring ASA | AF Gruppen vs. Orkla ASA | AF Gruppen vs. Kongsberg Gruppen ASA |
| American Shipping vs. Stolt Nielsen Limited | American Shipping vs. BW LPG | American Shipping vs. Aker ASA | American Shipping vs. BW Offshore |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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