Correlation Between Dampskibsselskabet and Frontline
Can any of the company-specific risk be diversified away by investing in both Dampskibsselskabet and Frontline 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 Dampskibsselskabet and Frontline into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dampskibsselskabet Norden AS and Frontline, you can compare the effects of market volatilities on Dampskibsselskabet and Frontline 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 Dampskibsselskabet with a short position of Frontline. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dampskibsselskabet and Frontline.
Diversification Opportunities for Dampskibsselskabet and Frontline
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dampskibsselskabet and Frontline is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Dampskibsselskabet Norden AS and Frontline in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frontline and Dampskibsselskabet 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 Dampskibsselskabet Norden AS are associated (or correlated) with Frontline. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frontline has no effect on the direction of Dampskibsselskabet i.e., Dampskibsselskabet and Frontline go up and down completely randomly.
Pair Corralation between Dampskibsselskabet and Frontline
Assuming the 90 days trading horizon Dampskibsselskabet Norden AS is expected to under-perform the Frontline. In addition to that, Dampskibsselskabet is 1.15 times more volatile than Frontline. It trades about -0.15 of its total potential returns per unit of risk. Frontline is currently generating about -0.07 per unit of volatility. If you would invest 21,550 in Frontline on August 29, 2024 and sell it today you would lose (700.00) from holding Frontline or give up 3.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dampskibsselskabet Norden AS vs. Frontline
Performance |
| Timeline |
| Dampskibsselskabet |
| Frontline |
Dampskibsselskabet and Frontline Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dampskibsselskabet and Frontline
The main advantage of trading using opposite Dampskibsselskabet and Frontline positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dampskibsselskabet position performs unexpectedly, Frontline 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 Frontline will offset losses from the drop in Frontline's long position.| Dampskibsselskabet vs. North Media AS | Dampskibsselskabet vs. HH International AS | Dampskibsselskabet vs. Per Aarsleff Holding | Dampskibsselskabet vs. First Farms AS |
| Frontline vs. Golden Ocean Group | Frontline vs. BW LPG | Frontline vs. FLEX LNG | Frontline vs. Avance Gas Holding |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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