Correlation Between Orient Overseas and Stolt Nielsen
Can any of the company-specific risk be diversified away by investing in both Orient Overseas and Stolt Nielsen 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 Orient Overseas and Stolt Nielsen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Orient Overseas Limited and Stolt Nielsen Limited, you can compare the effects of market volatilities on Orient Overseas and Stolt Nielsen 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 Orient Overseas with a short position of Stolt Nielsen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orient Overseas and Stolt Nielsen.
Diversification Opportunities for Orient Overseas and Stolt Nielsen
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Orient and Stolt is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Orient Overseas Limited and Stolt Nielsen Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stolt Nielsen Limited and Orient Overseas 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 Orient Overseas Limited are associated (or correlated) with Stolt Nielsen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stolt Nielsen Limited has no effect on the direction of Orient Overseas i.e., Orient Overseas and Stolt Nielsen go up and down completely randomly.
Pair Corralation between Orient Overseas and Stolt Nielsen
Assuming the 90 days horizon Orient Overseas Limited is expected to under-perform the Stolt Nielsen. But the pink sheet apears to be less risky and, when comparing its historical volatility, Orient Overseas Limited is 2.44 times less risky than Stolt Nielsen. The pink sheet trades about -0.15 of its potential returns per unit of risk. The Stolt Nielsen Limited is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 2,800 in Stolt Nielsen Limited on September 5, 2024 and sell it today you would lose (132.00) from holding Stolt Nielsen Limited or give up 4.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Orient Overseas Limited vs. Stolt Nielsen Limited
Performance |
| Timeline |
| Orient Overseas |
| Stolt Nielsen Limited |
Orient Overseas and Stolt Nielsen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orient Overseas and Stolt Nielsen
The main advantage of trading using opposite Orient Overseas and Stolt Nielsen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orient Overseas position performs unexpectedly, Stolt Nielsen 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 Stolt Nielsen will offset losses from the drop in Stolt Nielsen's long position.| Orient Overseas vs. Apple Inc | Orient Overseas vs. Microsoft | Orient Overseas vs. Amazon Inc | Orient Overseas vs. Alphabet Inc Class C |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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