Correlation Between Nordic Mining and Odfjell B
Can any of the company-specific risk be diversified away by investing in both Nordic Mining and Odfjell B 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 Nordic Mining and Odfjell B into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nordic Mining ASA and Odfjell B, you can compare the effects of market volatilities on Nordic Mining and Odfjell B 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 Nordic Mining with a short position of Odfjell B. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordic Mining and Odfjell B.
Diversification Opportunities for Nordic Mining and Odfjell B
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Nordic and Odfjell is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Nordic Mining ASA and Odfjell B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Odfjell B and Nordic Mining 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 Nordic Mining ASA are associated (or correlated) with Odfjell B. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Odfjell B has no effect on the direction of Nordic Mining i.e., Nordic Mining and Odfjell B go up and down completely randomly.
Pair Corralation between Nordic Mining and Odfjell B
Assuming the 90 days trading horizon Nordic Mining ASA is expected to generate 1.0 times more return on investment than Odfjell B. However, Nordic Mining is 1.0 times more volatile than Odfjell B. It trades about 0.08 of its potential returns per unit of risk. Odfjell B is currently generating about 0.03 per unit of risk. If you would invest 1,680 in Nordic Mining ASA on September 2, 2024 and sell it today you would earn a total of 861.00 from holding Nordic Mining ASA or generate 51.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nordic Mining ASA vs. Odfjell B
Performance |
| Timeline |
| Nordic Mining ASA |
| Odfjell B |
Nordic Mining and Odfjell B Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordic Mining and Odfjell B
The main advantage of trading using opposite Nordic Mining and Odfjell B positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordic Mining position performs unexpectedly, Odfjell B 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 B will offset losses from the drop in Odfjell B's long position.| Nordic Mining vs. SD Standard Drilling | Nordic Mining vs. Helgeland Sparebank | Nordic Mining vs. Grong Sparebank | Nordic Mining vs. Sparebanken Ost |
| Odfjell B vs. Dolphin Drilling AS | Odfjell B vs. Xplora Technologies As | Odfjell B vs. Napatech AS | Odfjell B vs. Lea Bank 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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