Correlation Between LBG Media and Odfjell Drilling
Can any of the company-specific risk be diversified away by investing in both LBG Media and Odfjell Drilling 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 LBG Media and Odfjell Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LBG Media PLC and Odfjell Drilling, you can compare the effects of market volatilities on LBG Media and Odfjell Drilling 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 LBG Media with a short position of Odfjell Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of LBG Media and Odfjell Drilling.
Diversification Opportunities for LBG Media and Odfjell Drilling
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between LBG and Odfjell is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding LBG Media PLC and Odfjell Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Odfjell Drilling and LBG Media 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 LBG Media PLC are associated (or correlated) with Odfjell Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Odfjell Drilling has no effect on the direction of LBG Media i.e., LBG Media and Odfjell Drilling go up and down completely randomly.
Pair Corralation between LBG Media and Odfjell Drilling
Assuming the 90 days trading horizon LBG Media PLC is expected to under-perform the Odfjell Drilling. But the stock apears to be less risky and, when comparing its historical volatility, LBG Media PLC is 1.06 times less risky than Odfjell Drilling. The stock trades about -0.15 of its potential returns per unit of risk. The Odfjell Drilling is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 5,115 in Odfjell Drilling on September 4, 2024 and sell it today you would lose (150.00) from holding Odfjell Drilling or give up 2.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LBG Media PLC vs. Odfjell Drilling
Performance |
| Timeline |
| LBG Media PLC |
| Odfjell Drilling |
LBG Media and Odfjell Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LBG Media and Odfjell Drilling
The main advantage of trading using opposite LBG Media and Odfjell Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LBG Media position performs unexpectedly, Odfjell Drilling 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 Drilling will offset losses from the drop in Odfjell Drilling's long position.| LBG Media vs. Quadrise Plc | LBG Media vs. ImmuPharma PLC | LBG Media vs. Intuitive Investments Group | LBG Media vs. European Metals Holdings |
| Odfjell Drilling vs. Samsung Electronics Co | Odfjell Drilling vs. Samsung Electronics Co | Odfjell Drilling vs. Hyundai Motor | Odfjell Drilling vs. Toyota Motor Corp |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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