Correlation Between Eqva ASA and Havila Shipping
Can any of the company-specific risk be diversified away by investing in both Eqva 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 Eqva 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 Eqva ASA and Havila Shipping ASA, you can compare the effects of market volatilities on Eqva 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 Eqva ASA with a short position of Havila Shipping. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eqva ASA and Havila Shipping.
Diversification Opportunities for Eqva ASA and Havila Shipping
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Eqva and Havila is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Eqva 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 Eqva 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 Eqva 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 Eqva ASA i.e., Eqva ASA and Havila Shipping go up and down completely randomly.
Pair Corralation between Eqva ASA and Havila Shipping
Assuming the 90 days trading horizon Eqva ASA is expected to generate 0.61 times more return on investment than Havila Shipping. However, Eqva ASA is 1.65 times less risky than Havila Shipping. It trades about 0.08 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 282.00 in Eqva ASA on August 25, 2024 and sell it today you would earn a total of 206.00 from holding Eqva ASA or generate 73.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eqva ASA vs. Havila Shipping ASA
Performance |
| Timeline |
| Eqva ASA |
| Havila Shipping ASA |
Eqva ASA and Havila Shipping Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eqva ASA and Havila Shipping
The main advantage of trading using opposite Eqva ASA and Havila Shipping positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eqva 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.The idea behind Eqva ASA and Havila Shipping ASA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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