Correlation Between Flex LNG and Botnia Exploration
Can any of the company-specific risk be diversified away by investing in both Flex LNG and Botnia Exploration 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 Flex LNG and Botnia Exploration into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flex LNG and Botnia Exploration Holding, you can compare the effects of market volatilities on Flex LNG and Botnia Exploration 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 Flex LNG with a short position of Botnia Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flex LNG and Botnia Exploration.
Diversification Opportunities for Flex LNG and Botnia Exploration
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Flex and Botnia is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Flex LNG and Botnia Exploration Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Botnia Exploration and Flex LNG 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 Flex LNG are associated (or correlated) with Botnia Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Botnia Exploration has no effect on the direction of Flex LNG i.e., Flex LNG and Botnia Exploration go up and down completely randomly.
Pair Corralation between Flex LNG and Botnia Exploration
Assuming the 90 days trading horizon Flex LNG is expected to generate 1.22 times less return on investment than Botnia Exploration. But when comparing it to its historical volatility, Flex LNG is 2.63 times less risky than Botnia Exploration. It trades about 0.21 of its potential returns per unit of risk. Botnia Exploration Holding is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,215 in Botnia Exploration Holding on November 5, 2024 and sell it today you would earn a total of 75.00 from holding Botnia Exploration Holding or generate 6.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Flex LNG vs. Botnia Exploration Holding
Performance |
| Timeline |
| Flex LNG |
| Botnia Exploration |
Flex LNG and Botnia Exploration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flex LNG and Botnia Exploration
The main advantage of trading using opposite Flex LNG and Botnia Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flex LNG position performs unexpectedly, Botnia Exploration 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 Botnia Exploration will offset losses from the drop in Botnia Exploration's long position.| Flex LNG vs. Qleanair Holding AB | Flex LNG vs. JLT Mobile Computers | Flex LNG vs. High Coast Distillery | Flex LNG vs. Serstech AB |
| Botnia Exploration vs. aXichem AB | Botnia Exploration vs. BE Group AB | Botnia Exploration vs. Arctic Gold Publ |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
Other Complementary Tools
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |