Correlation Between Deep Value and Dolphin Drilling
Can any of the company-specific risk be diversified away by investing in both Deep Value and Dolphin 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 Deep Value and Dolphin Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Deep Value Driller and Dolphin Drilling AS, you can compare the effects of market volatilities on Deep Value and Dolphin 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 Deep Value with a short position of Dolphin Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deep Value and Dolphin Drilling.
Diversification Opportunities for Deep Value and Dolphin Drilling
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Deep and Dolphin is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Deep Value Driller and Dolphin Drilling AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dolphin Drilling and Deep Value 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 Deep Value Driller are associated (or correlated) with Dolphin Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dolphin Drilling has no effect on the direction of Deep Value i.e., Deep Value and Dolphin Drilling go up and down completely randomly.
Pair Corralation between Deep Value and Dolphin Drilling
Assuming the 90 days trading horizon Deep Value Driller is expected to generate 0.52 times more return on investment than Dolphin Drilling. However, Deep Value Driller is 1.91 times less risky than Dolphin Drilling. It trades about -0.34 of its potential returns per unit of risk. Dolphin Drilling AS is currently generating about -0.18 per unit of risk. If you would invest 1,939 in Deep Value Driller on September 1, 2024 and sell it today you would lose (269.00) from holding Deep Value Driller or give up 13.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Deep Value Driller vs. Dolphin Drilling AS
Performance |
| Timeline |
| Deep Value Driller |
| Dolphin Drilling |
Deep Value and Dolphin Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deep Value and Dolphin Drilling
The main advantage of trading using opposite Deep Value and Dolphin Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deep Value position performs unexpectedly, Dolphin 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 Dolphin Drilling will offset losses from the drop in Dolphin Drilling's long position.| Deep Value vs. Sogn Sparebank | Deep Value vs. Morrow Bank ASA | Deep Value vs. Lea Bank ASA | Deep Value vs. Cloudberry Clean Energy |
| Dolphin Drilling vs. Shelf Drilling | Dolphin Drilling vs. BW Offshore | Dolphin Drilling vs. Subsea 7 SA | Dolphin Drilling vs. Elkem ASA |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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