Correlation Between Frontline and Saga Pure
Can any of the company-specific risk be diversified away by investing in both Frontline and Saga Pure 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 Frontline and Saga Pure into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Frontline and Saga Pure ASA, you can compare the effects of market volatilities on Frontline and Saga Pure 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 Frontline with a short position of Saga Pure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Frontline and Saga Pure.
Diversification Opportunities for Frontline and Saga Pure
Poor diversification
The 3 months correlation between Frontline and Saga is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Frontline and Saga Pure ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saga Pure ASA and Frontline 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 Frontline are associated (or correlated) with Saga Pure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saga Pure ASA has no effect on the direction of Frontline i.e., Frontline and Saga Pure go up and down completely randomly.
Pair Corralation between Frontline and Saga Pure
Assuming the 90 days trading horizon Frontline is expected to generate 2.9 times more return on investment than Saga Pure. However, Frontline is 2.9 times more volatile than Saga Pure ASA. It trades about 0.06 of its potential returns per unit of risk. Saga Pure ASA is currently generating about -0.08 per unit of risk. If you would invest 11,013 in Frontline on October 24, 2024 and sell it today you would earn a total of 7,987 from holding Frontline or generate 72.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Frontline vs. Saga Pure ASA
Performance |
| Timeline |
| Frontline |
| Saga Pure ASA |
Frontline and Saga Pure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Frontline and Saga Pure
The main advantage of trading using opposite Frontline and Saga Pure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Frontline position performs unexpectedly, Saga Pure 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 Saga Pure will offset losses from the drop in Saga Pure's long position.| Frontline vs. Golden Ocean Group | Frontline vs. BW LPG | Frontline vs. FLEX LNG | Frontline vs. Avance Gas Holding |
| Saga Pure vs. Aker Horizons AS | Saga Pure vs. REC Silicon ASA | Saga Pure vs. Kongsberg Automotive Holding | Saga Pure vs. Aker Carbon Capture |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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