Correlation Between Itera ASA and Odfjell Technology
Can any of the company-specific risk be diversified away by investing in both Itera ASA and Odfjell Technology 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 Itera ASA and Odfjell Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Itera ASA and Odfjell Technology, you can compare the effects of market volatilities on Itera ASA and Odfjell Technology 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 Itera ASA with a short position of Odfjell Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Itera ASA and Odfjell Technology.
Diversification Opportunities for Itera ASA and Odfjell Technology
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Itera and Odfjell is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Itera ASA and Odfjell Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Odfjell Technology and Itera 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 Itera ASA are associated (or correlated) with Odfjell Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Odfjell Technology has no effect on the direction of Itera ASA i.e., Itera ASA and Odfjell Technology go up and down completely randomly.
Pair Corralation between Itera ASA and Odfjell Technology
Assuming the 90 days trading horizon Itera ASA is expected to generate 1.13 times more return on investment than Odfjell Technology. However, Itera ASA is 1.13 times more volatile than Odfjell Technology. It trades about -0.06 of its potential returns per unit of risk. Odfjell Technology is currently generating about -0.07 per unit of risk. If you would invest 1,131 in Itera ASA on August 31, 2024 and sell it today you would lose (233.00) from holding Itera ASA or give up 20.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Itera ASA vs. Odfjell Technology
Performance |
| Timeline |
| Itera ASA |
| Odfjell Technology |
Itera ASA and Odfjell Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Itera ASA and Odfjell Technology
The main advantage of trading using opposite Itera ASA and Odfjell Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Itera ASA position performs unexpectedly, Odfjell Technology 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 Odfjell Technology will offset losses from the drop in Odfjell Technology's long position.| Itera ASA vs. Dolphin Drilling AS | Itera ASA vs. Pareto Bank ASA | Itera ASA vs. Morrow Bank ASA | Itera ASA vs. Nordic Mining ASA |
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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