Correlation Between Awilco Drilling and Odfjell Technology
Can any of the company-specific risk be diversified away by investing in both Awilco Drilling and Odfjell Technology 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 Awilco Drilling and Odfjell Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Awilco Drilling PLC and Odfjell Technology, you can compare the effects of market volatilities on Awilco Drilling and Odfjell Technology 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 Awilco Drilling with a short position of Odfjell Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Awilco Drilling and Odfjell Technology.
Diversification Opportunities for Awilco Drilling and Odfjell Technology
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Awilco and Odfjell is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Awilco Drilling PLC and Odfjell Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Odfjell Technology and Awilco Drilling 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 Awilco Drilling PLC are associated (or correlated) with Odfjell Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Odfjell Technology has no effect on the direction of Awilco Drilling i.e., Awilco Drilling and Odfjell Technology go up and down completely randomly.
Pair Corralation between Awilco Drilling and Odfjell Technology
Assuming the 90 days trading horizon Awilco Drilling PLC is expected to generate 2.07 times more return on investment than Odfjell Technology. However, Awilco Drilling is 2.07 times more volatile than Odfjell Technology. It trades about -0.01 of its potential returns per unit of risk. Odfjell Technology is currently generating about -0.05 per unit of risk. If you would invest 2,310 in Awilco Drilling PLC on September 2, 2024 and sell it today you would lose (200.00) from holding Awilco Drilling PLC or give up 8.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Awilco Drilling PLC vs. Odfjell Technology
Performance |
| Timeline |
| Awilco Drilling PLC |
| Odfjell Technology |
Awilco Drilling and Odfjell Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Awilco Drilling and Odfjell Technology
The main advantage of trading using opposite Awilco Drilling and Odfjell Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Awilco Drilling position performs unexpectedly, Odfjell Technology 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 Odfjell Technology will offset losses from the drop in Odfjell Technology's long position.| Awilco Drilling vs. DnB ASA | Awilco Drilling vs. Mowi ASA | Awilco Drilling vs. Yara International ASA | Awilco Drilling vs. Telenor ASA |
| Odfjell Technology vs. Sunndal Sparebank | Odfjell Technology vs. Aasen Sparebank | Odfjell Technology vs. Aurskog Sparebank | Odfjell Technology vs. Jaeren Sparebank |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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