Correlation Between Havila Shipping and Stolt Nielsen
Can any of the company-specific risk be diversified away by investing in both Havila Shipping and Stolt Nielsen 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 Havila Shipping and Stolt Nielsen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Havila Shipping ASA and Stolt Nielsen Limited, you can compare the effects of market volatilities on Havila Shipping and Stolt Nielsen 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 Havila Shipping with a short position of Stolt Nielsen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Havila Shipping and Stolt Nielsen.
Diversification Opportunities for Havila Shipping and Stolt Nielsen
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Havila and Stolt is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Havila Shipping ASA and Stolt Nielsen Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stolt Nielsen Limited and Havila Shipping 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 Havila Shipping ASA are associated (or correlated) with Stolt Nielsen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stolt Nielsen Limited has no effect on the direction of Havila Shipping i.e., Havila Shipping and Stolt Nielsen go up and down completely randomly.
Pair Corralation between Havila Shipping and Stolt Nielsen
Assuming the 90 days trading horizon Havila Shipping ASA is expected to under-perform the Stolt Nielsen. In addition to that, Havila Shipping is 3.1 times more volatile than Stolt Nielsen Limited. It trades about -0.04 of its total potential returns per unit of risk. Stolt Nielsen Limited is currently generating about -0.01 per unit of volatility. If you would invest 32,831 in Stolt Nielsen Limited on August 26, 2024 and sell it today you would lose (3,381) from holding Stolt Nielsen Limited or give up 10.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Havila Shipping ASA vs. Stolt Nielsen Limited
Performance |
| Timeline |
| Havila Shipping ASA |
| Stolt Nielsen Limited |
Havila Shipping and Stolt Nielsen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Havila Shipping and Stolt Nielsen
The main advantage of trading using opposite Havila Shipping and Stolt Nielsen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Havila Shipping position performs unexpectedly, Stolt Nielsen 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 Stolt Nielsen will offset losses from the drop in Stolt Nielsen's long position.The idea behind Havila Shipping ASA and Stolt Nielsen Limited 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.| Stolt Nielsen vs. Eidesvik Offshore ASA | Stolt Nielsen vs. Kitron ASA | Stolt Nielsen vs. Havila Shipping ASA | Stolt Nielsen 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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