Correlation Between Litigation Capital and Odfjell Drilling
Can any of the company-specific risk be diversified away by investing in both Litigation Capital 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 Litigation Capital and Odfjell Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Litigation Capital Management and Odfjell Drilling, you can compare the effects of market volatilities on Litigation Capital 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 Litigation Capital with a short position of Odfjell Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Litigation Capital and Odfjell Drilling.
Diversification Opportunities for Litigation Capital and Odfjell Drilling
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Litigation and Odfjell is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Litigation Capital Management and Odfjell Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Odfjell Drilling and Litigation Capital 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 Litigation Capital Management 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 Litigation Capital i.e., Litigation Capital and Odfjell Drilling go up and down completely randomly.
Pair Corralation between Litigation Capital and Odfjell Drilling
Assuming the 90 days trading horizon Litigation Capital Management is expected to under-perform the Odfjell Drilling. But the stock apears to be less risky and, when comparing its historical volatility, Litigation Capital Management is 1.36 times less risky than Odfjell Drilling. The stock trades about -0.1 of its potential returns per unit of risk. The Odfjell Drilling is currently generating about 0.54 of returns per unit of risk over similar time horizon. If you would invest 5,010 in Odfjell Drilling on October 23, 2024 and sell it today you would earn a total of 1,115 from holding Odfjell Drilling or generate 22.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
Litigation Capital Management vs. Odfjell Drilling
Performance |
| Timeline |
| Litigation Capital |
| Odfjell Drilling |
Litigation Capital and Odfjell Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Litigation Capital and Odfjell Drilling
The main advantage of trading using opposite Litigation Capital and Odfjell Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Litigation Capital 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.| Litigation Capital vs. Catalyst Media Group | Litigation Capital vs. CATLIN GROUP | Litigation Capital vs. Tamburi Investment Partners | Litigation Capital vs. Magnora ASA |
| Odfjell Drilling vs. Sydbank | Odfjell Drilling vs. Litigation Capital Management | Odfjell Drilling vs. Raymond James Financial | Odfjell Drilling vs. Waste Management |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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