Correlation Between Dolphin Drilling and Odfjell B
Can any of the company-specific risk be diversified away by investing in both Dolphin Drilling and Odfjell B 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 Dolphin Drilling and Odfjell B into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dolphin Drilling AS and Odfjell B, you can compare the effects of market volatilities on Dolphin Drilling and Odfjell B 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 Dolphin Drilling with a short position of Odfjell B. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dolphin Drilling and Odfjell B.
Diversification Opportunities for Dolphin Drilling and Odfjell B
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dolphin and Odfjell is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Dolphin Drilling AS and Odfjell B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Odfjell B and Dolphin 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 Dolphin Drilling AS are associated (or correlated) with Odfjell B. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Odfjell B has no effect on the direction of Dolphin Drilling i.e., Dolphin Drilling and Odfjell B go up and down completely randomly.
Pair Corralation between Dolphin Drilling and Odfjell B
Assuming the 90 days trading horizon Dolphin Drilling AS is expected to under-perform the Odfjell B. In addition to that, Dolphin Drilling is 1.6 times more volatile than Odfjell B. It trades about -0.07 of its total potential returns per unit of risk. Odfjell B is currently generating about 0.06 per unit of volatility. If you would invest 7,318 in Odfjell B on August 31, 2024 and sell it today you would earn a total of 3,532 from holding Odfjell B or generate 48.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dolphin Drilling AS vs. Odfjell B
Performance |
| Timeline |
| Dolphin Drilling |
| Odfjell B |
Dolphin Drilling and Odfjell B Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dolphin Drilling and Odfjell B
The main advantage of trading using opposite Dolphin Drilling and Odfjell B positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dolphin Drilling position performs unexpectedly, Odfjell B 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 B will offset losses from the drop in Odfjell B's long position.| Dolphin Drilling vs. Shelf Drilling | Dolphin Drilling vs. BW Offshore | Dolphin Drilling vs. Subsea 7 SA | Dolphin Drilling vs. Elkem ASA |
| Odfjell B vs. Nordhealth AS | Odfjell B vs. Proximar Seafood AS | Odfjell B vs. Nordic Mining ASA | Odfjell B vs. Aasen 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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