Correlation Between Elkem ASA and Havila Shipping
Can any of the company-specific risk be diversified away by investing in both Elkem ASA and Havila Shipping 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 Elkem ASA and Havila Shipping into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elkem ASA and Havila Shipping ASA, you can compare the effects of market volatilities on Elkem ASA and Havila Shipping 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 Elkem ASA with a short position of Havila Shipping. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elkem ASA and Havila Shipping.
Diversification Opportunities for Elkem ASA and Havila Shipping
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Elkem and Havila is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Elkem ASA and Havila Shipping ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Havila Shipping ASA and Elkem ASA 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 Elkem ASA are associated (or correlated) with Havila Shipping. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Havila Shipping ASA has no effect on the direction of Elkem ASA i.e., Elkem ASA and Havila Shipping go up and down completely randomly.
Pair Corralation between Elkem ASA and Havila Shipping
Assuming the 90 days trading horizon Elkem ASA is expected to generate 0.39 times more return on investment than Havila Shipping. However, Elkem ASA is 2.59 times less risky than Havila Shipping. It trades about -0.02 of its potential returns per unit of risk. Havila Shipping ASA is currently generating about -0.03 per unit of risk. If you would invest 2,116 in Elkem ASA on August 25, 2024 and sell it today you would lose (294.00) from holding Elkem ASA or give up 13.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elkem ASA vs. Havila Shipping ASA
Performance |
| Timeline |
| Elkem ASA |
| Havila Shipping ASA |
Elkem ASA and Havila Shipping Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elkem ASA and Havila Shipping
The main advantage of trading using opposite Elkem ASA and Havila Shipping positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elkem ASA position performs unexpectedly, Havila Shipping 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 Havila Shipping will offset losses from the drop in Havila Shipping's long position.| Elkem ASA vs. Goodtech | Elkem ASA vs. Havila Shipping ASA | Elkem ASA vs. Eidesvik Offshore ASA | Elkem ASA vs. Byggma |
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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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