Correlation Between Clean Seas and Shelf Drilling
Can any of the company-specific risk be diversified away by investing in both Clean Seas and Shelf Drilling 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 Clean Seas and Shelf Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Clean Seas Seafood and Shelf Drilling, you can compare the effects of market volatilities on Clean Seas and Shelf Drilling 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 Clean Seas with a short position of Shelf Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clean Seas and Shelf Drilling.
Diversification Opportunities for Clean Seas and Shelf Drilling
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Clean and Shelf is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Clean Seas Seafood and Shelf Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shelf Drilling and Clean Seas 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 Clean Seas Seafood are associated (or correlated) with Shelf Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shelf Drilling has no effect on the direction of Clean Seas i.e., Clean Seas and Shelf Drilling go up and down completely randomly.
Pair Corralation between Clean Seas and Shelf Drilling
Assuming the 90 days trading horizon Clean Seas Seafood is expected to under-perform the Shelf Drilling. In addition to that, Clean Seas is 1.26 times more volatile than Shelf Drilling. It trades about -0.05 of its total potential returns per unit of risk. Shelf Drilling is currently generating about 0.01 per unit of volatility. If you would invest 2,308 in Shelf Drilling on September 12, 2024 and sell it today you would lose (208.00) from holding Shelf Drilling or give up 9.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Clean Seas Seafood vs. Shelf Drilling
Performance |
| Timeline |
| Clean Seas Seafood |
| Shelf Drilling |
Clean Seas and Shelf Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clean Seas and Shelf Drilling
The main advantage of trading using opposite Clean Seas and Shelf Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clean Seas position performs unexpectedly, Shelf Drilling 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 Shelf Drilling will offset losses from the drop in Shelf Drilling's long position.| Clean Seas vs. SalMar ASA | Clean Seas vs. Lery Seafood Group | Clean Seas vs. Pf Bakkafrost | Clean Seas vs. Grieg Seafood ASA |
| Shelf Drilling vs. Lery Seafood Group | Shelf Drilling vs. Clean Seas Seafood | Shelf Drilling vs. Odfjell Drilling | Shelf Drilling vs. 5Th Planet Games |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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