Correlation Between Orkla ASA and Jinhui Shipping

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Can any of the company-specific risk be diversified away by investing in both Orkla ASA and Jinhui Shipping 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 Orkla ASA and Jinhui Shipping into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Orkla ASA and Jinhui Shipping and, you can compare the effects of market volatilities on Orkla ASA and Jinhui Shipping 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 Orkla ASA with a short position of Jinhui Shipping. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orkla ASA and Jinhui Shipping.

Diversification Opportunities for Orkla ASA and Jinhui Shipping

-0.3
  Correlation Coefficient

Very good diversification

The 3 months correlation between Orkla and Jinhui is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Orkla ASA and Jinhui Shipping and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jinhui Shipping and Orkla ASA 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 Orkla ASA are associated (or correlated) with Jinhui Shipping. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jinhui Shipping has no effect on the direction of Orkla ASA i.e., Orkla ASA and Jinhui Shipping go up and down completely randomly.

Pair Corralation between Orkla ASA and Jinhui Shipping

Assuming the 90 days trading horizon Orkla ASA is expected to under-perform the Jinhui Shipping. But the stock apears to be less risky and, when comparing its historical volatility, Orkla ASA is 2.63 times less risky than Jinhui Shipping. The stock trades about -0.01 of its potential returns per unit of risk. The Jinhui Shipping and is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  608.00  in Jinhui Shipping and on August 29, 2024 and sell it today you would earn a total of  54.00  from holding Jinhui Shipping and or generate 8.88% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Orkla ASA  vs.  Jinhui Shipping and

 Performance 
       Timeline  
Orkla ASA 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Orkla ASA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Orkla ASA may actually be approaching a critical reversion point that can send shares even higher in December 2024.
Jinhui Shipping 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Weak
Over the last 90 days Jinhui Shipping and has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Jinhui Shipping is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Orkla ASA and Jinhui Shipping Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Orkla ASA and Jinhui Shipping

The main advantage of trading using opposite Orkla ASA and Jinhui Shipping positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orkla ASA position performs unexpectedly, Jinhui Shipping 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 Jinhui Shipping will offset losses from the drop in Jinhui Shipping's long position.
The idea behind Orkla ASA and Jinhui Shipping and pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.

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