Correlation Between Odfjell SE and Arendals Fossekompani
Can any of the company-specific risk be diversified away by investing in both Odfjell SE and Arendals Fossekompani 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 Odfjell SE and Arendals Fossekompani into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Odfjell SE and Arendals Fossekompani ASA, you can compare the effects of market volatilities on Odfjell SE and Arendals Fossekompani 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 Odfjell SE with a short position of Arendals Fossekompani. Check out your portfolio center. Please also check ongoing floating volatility patterns of Odfjell SE and Arendals Fossekompani.
Diversification Opportunities for Odfjell SE and Arendals Fossekompani
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Odfjell and Arendals is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Odfjell SE and Arendals Fossekompani ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arendals Fossekompani ASA and Odfjell SE 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 Odfjell SE are associated (or correlated) with Arendals Fossekompani. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arendals Fossekompani ASA has no effect on the direction of Odfjell SE i.e., Odfjell SE and Arendals Fossekompani go up and down completely randomly.
Pair Corralation between Odfjell SE and Arendals Fossekompani
Assuming the 90 days trading horizon Odfjell SE is expected to generate 0.98 times more return on investment than Arendals Fossekompani. However, Odfjell SE is 1.02 times less risky than Arendals Fossekompani. It trades about 0.05 of its potential returns per unit of risk. Arendals Fossekompani ASA is currently generating about -0.02 per unit of risk. If you would invest 7,671 in Odfjell SE on September 1, 2024 and sell it today you would earn a total of 3,269 from holding Odfjell SE or generate 42.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.73% |
| Values | Daily Returns |
Odfjell SE vs. Arendals Fossekompani ASA
Performance |
| Timeline |
| Odfjell SE |
| Arendals Fossekompani ASA |
Odfjell SE and Arendals Fossekompani Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Odfjell SE and Arendals Fossekompani
The main advantage of trading using opposite Odfjell SE and Arendals Fossekompani positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Odfjell SE position performs unexpectedly, Arendals Fossekompani 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 Arendals Fossekompani will offset losses from the drop in Arendals Fossekompani's long position.| Odfjell SE vs. Stolt Nielsen Limited | Odfjell SE vs. Odfjell B | Odfjell SE vs. Wilh Wilhelmsen Holding | Odfjell SE vs. Frontline |
| Arendals Fossekompani vs. AF Gruppen ASA | Arendals Fossekompani vs. Aker ASA | Arendals Fossekompani vs. Kitron ASA | Arendals Fossekompani vs. Kongsberg Gruppen 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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