Correlation Between Petronor and Belships
Can any of the company-specific risk be diversified away by investing in both Petronor and Belships 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 Petronor and Belships into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Petronor EP and Belships, you can compare the effects of market volatilities on Petronor and Belships 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 Petronor with a short position of Belships. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petronor and Belships.
Diversification Opportunities for Petronor and Belships
Good diversification
The 3 months correlation between Petronor and Belships is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Petronor EP and Belships in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Belships and Petronor 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 Petronor EP are associated (or correlated) with Belships. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Belships has no effect on the direction of Petronor i.e., Petronor and Belships go up and down completely randomly.
Pair Corralation between Petronor and Belships
Assuming the 90 days trading horizon Petronor is expected to generate 1.46 times less return on investment than Belships. But when comparing it to its historical volatility, Petronor EP is 1.11 times less risky than Belships. It trades about 0.08 of its potential returns per unit of risk. Belships is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,723 in Belships on September 1, 2024 and sell it today you would earn a total of 97.00 from holding Belships or generate 5.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Petronor EP vs. Belships
Performance |
| Timeline |
| Petronor EP |
| Belships |
Petronor and Belships Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petronor and Belships
The main advantage of trading using opposite Petronor and Belships positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petronor position performs unexpectedly, Belships 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 Belships will offset losses from the drop in Belships' long position.| Petronor vs. Odfjell Drilling | Petronor vs. Sparebank 1 SMN | Petronor vs. NorAm Drilling AS | Petronor vs. Romerike Sparebank |
| Belships vs. Havila Shipping ASA | Belships vs. Shelf Drilling | Belships vs. Solstad Offsho | Belships vs. Eidesvik Offshore 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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