Correlation Between Byggma and American Shipping
Can any of the company-specific risk be diversified away by investing in both Byggma 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 Byggma and American Shipping into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Byggma and American Shipping, you can compare the effects of market volatilities on Byggma 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 Byggma with a short position of American Shipping. Check out your portfolio center. Please also check ongoing floating volatility patterns of Byggma and American Shipping.
Diversification Opportunities for Byggma and American Shipping
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Byggma and American is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Byggma and American Shipping in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Shipping and Byggma 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 Byggma 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 Byggma i.e., Byggma and American Shipping go up and down completely randomly.
Pair Corralation between Byggma and American Shipping
Assuming the 90 days trading horizon Byggma is expected to under-perform the American Shipping. But the stock apears to be less risky and, when comparing its historical volatility, Byggma is 1.22 times less risky than American Shipping. The stock trades about -0.04 of its potential returns per unit of risk. The American Shipping is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 3,293 in American Shipping on August 29, 2024 and sell it today you would lose (518.00) from holding American Shipping or give up 15.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Byggma vs. American Shipping
Performance |
| Timeline |
| Byggma |
| American Shipping |
Byggma and American Shipping Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Byggma and American Shipping
The main advantage of trading using opposite Byggma and American Shipping positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Byggma 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.| Byggma vs. AF Gruppen ASA | Byggma vs. American Shipping | Byggma vs. Arendals Fossekompani ASA | Byggma vs. Kid ASA |
| American Shipping vs. Frontline | American Shipping vs. BW LPG | American Shipping vs. FLEX LNG | American Shipping vs. Dampskibsselskabet Norden AS |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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