Correlation Between Odfjell Drilling and Skue Sparebank
Can any of the company-specific risk be diversified away by investing in both Odfjell Drilling and Skue Sparebank 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 Drilling and Skue Sparebank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Odfjell Drilling and Skue Sparebank, you can compare the effects of market volatilities on Odfjell Drilling and Skue Sparebank 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 Drilling with a short position of Skue Sparebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Odfjell Drilling and Skue Sparebank.
Diversification Opportunities for Odfjell Drilling and Skue Sparebank
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Odfjell and Skue is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Odfjell Drilling and Skue Sparebank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skue Sparebank and Odfjell Drilling 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 Drilling are associated (or correlated) with Skue Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skue Sparebank has no effect on the direction of Odfjell Drilling i.e., Odfjell Drilling and Skue Sparebank go up and down completely randomly.
Pair Corralation between Odfjell Drilling and Skue Sparebank
Assuming the 90 days trading horizon Odfjell Drilling is expected to under-perform the Skue Sparebank. In addition to that, Odfjell Drilling is 1.74 times more volatile than Skue Sparebank. It trades about -0.04 of its total potential returns per unit of risk. Skue Sparebank is currently generating about 0.06 per unit of volatility. If you would invest 23,700 in Skue Sparebank on September 1, 2024 and sell it today you would earn a total of 2,200 from holding Skue Sparebank or generate 9.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Odfjell Drilling vs. Skue Sparebank
Performance |
| Timeline |
| Odfjell Drilling |
| Skue Sparebank |
Odfjell Drilling and Skue Sparebank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Odfjell Drilling and Skue Sparebank
The main advantage of trading using opposite Odfjell Drilling and Skue Sparebank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Odfjell Drilling position performs unexpectedly, Skue Sparebank 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 Skue Sparebank will offset losses from the drop in Skue Sparebank's long position.| Odfjell Drilling vs. Shelf Drilling | Odfjell Drilling vs. BW Offshore | Odfjell Drilling vs. Subsea 7 SA | Odfjell Drilling vs. Elkem ASA |
| Skue Sparebank vs. Melhus Sparebank | Skue Sparebank vs. Sparebanken Ost | Skue Sparebank vs. Sparebanken Sor |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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