Correlation Between American Shipping and Arendals Fossekompani
Can any of the company-specific risk be diversified away by investing in both American Shipping and Arendals Fossekompani 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 Arendals Fossekompani into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Shipping and Arendals Fossekompani ASA, you can compare the effects of market volatilities on American Shipping and Arendals Fossekompani 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 Arendals Fossekompani. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Shipping and Arendals Fossekompani.
Diversification Opportunities for American Shipping and Arendals Fossekompani
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and Arendals is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding American Shipping and Arendals Fossekompani ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arendals Fossekompani 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 Arendals Fossekompani. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arendals Fossekompani ASA has no effect on the direction of American Shipping i.e., American Shipping and Arendals Fossekompani go up and down completely randomly.
Pair Corralation between American Shipping and Arendals Fossekompani
Assuming the 90 days trading horizon American Shipping is expected to generate 0.62 times more return on investment than Arendals Fossekompani. However, American Shipping is 1.6 times less risky than Arendals Fossekompani. It trades about -0.03 of its potential returns per unit of risk. Arendals Fossekompani ASA is currently generating about -0.18 per unit of risk. If you would invest 2,803 in American Shipping on September 1, 2024 and sell it today you would lose (38.00) from holding American Shipping or give up 1.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
American Shipping vs. Arendals Fossekompani ASA
Performance |
| Timeline |
| American Shipping |
| Arendals Fossekompani ASA |
American Shipping and Arendals Fossekompani Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Shipping and Arendals Fossekompani
The main advantage of trading using opposite American Shipping and Arendals Fossekompani positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Shipping position performs unexpectedly, Arendals Fossekompani 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 Arendals Fossekompani will offset losses from the drop in Arendals Fossekompani'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 |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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