Correlation Between American Shipping and AF Gruppen
Can any of the company-specific risk be diversified away by investing in both American Shipping and AF Gruppen 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 American Shipping and AF Gruppen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Shipping and AF Gruppen ASA, you can compare the effects of market volatilities on American Shipping and AF Gruppen 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 American Shipping with a short position of AF Gruppen. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Shipping and AF Gruppen.
Diversification Opportunities for American Shipping and AF Gruppen
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between American and AFG is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding American Shipping and AF Gruppen ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AF Gruppen ASA and American Shipping 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 American Shipping are associated (or correlated) with AF Gruppen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AF Gruppen ASA has no effect on the direction of American Shipping i.e., American Shipping and AF Gruppen go up and down completely randomly.
Pair Corralation between American Shipping and AF Gruppen
Assuming the 90 days trading horizon American Shipping is expected to under-perform the AF Gruppen. In addition to that, American Shipping is 1.5 times more volatile than AF Gruppen ASA. It trades about -0.03 of its total potential returns per unit of risk. AF Gruppen ASA is currently generating about 0.26 per unit of volatility. If you would invest 13,140 in AF Gruppen ASA on September 1, 2024 and sell it today you would earn a total of 820.00 from holding AF Gruppen ASA or generate 6.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
American Shipping vs. AF Gruppen ASA
Performance |
| Timeline |
| American Shipping |
| AF Gruppen ASA |
American Shipping and AF Gruppen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Shipping and AF Gruppen
The main advantage of trading using opposite American Shipping and AF Gruppen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Shipping position performs unexpectedly, AF Gruppen 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 AF Gruppen will offset losses from the drop in AF Gruppen's long position.| American Shipping vs. Aker Horizons AS | American Shipping vs. REC Silicon ASA | American Shipping vs. Kongsberg Automotive Holding | American Shipping vs. Aker Carbon Capture |
| AF Gruppen vs. Veidekke ASA | AF Gruppen vs. Gjensidige Forsikring ASA | AF Gruppen vs. Orkla ASA | AF Gruppen 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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