Correlation Between DHT Holdings and Barloworld
Can any of the company-specific risk be diversified away by investing in both DHT Holdings and Barloworld 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 DHT Holdings and Barloworld into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DHT Holdings and Barloworld Ltd ADR, you can compare the effects of market volatilities on DHT Holdings and Barloworld 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 DHT Holdings with a short position of Barloworld. Check out your portfolio center. Please also check ongoing floating volatility patterns of DHT Holdings and Barloworld.
Diversification Opportunities for DHT Holdings and Barloworld
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between DHT and Barloworld is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding DHT Holdings and Barloworld Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barloworld ADR and DHT Holdings 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 DHT Holdings are associated (or correlated) with Barloworld. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barloworld ADR has no effect on the direction of DHT Holdings i.e., DHT Holdings and Barloworld go up and down completely randomly.
Pair Corralation between DHT Holdings and Barloworld
Considering the 90-day investment horizon DHT Holdings is expected to under-perform the Barloworld. But the stock apears to be less risky and, when comparing its historical volatility, DHT Holdings is 2.69 times less risky than Barloworld. The stock trades about -0.07 of its potential returns per unit of risk. The Barloworld Ltd ADR is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 403.00 in Barloworld Ltd ADR on August 28, 2024 and sell it today you would earn a total of 20.00 from holding Barloworld Ltd ADR or generate 4.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DHT Holdings vs. Barloworld Ltd ADR
Performance |
| Timeline |
| DHT Holdings |
| Barloworld ADR |
DHT Holdings and Barloworld Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DHT Holdings and Barloworld
The main advantage of trading using opposite DHT Holdings and Barloworld positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DHT Holdings position performs unexpectedly, Barloworld 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 Barloworld will offset losses from the drop in Barloworld's long position.| DHT Holdings vs. Teekay Tankers | DHT Holdings vs. Frontline | DHT Holdings vs. International Seaways | DHT Holdings vs. Scorpio Tankers |
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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