Correlation Between REC Silicon and Golden Ocean
Can any of the company-specific risk be diversified away by investing in both REC Silicon and Golden Ocean 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 REC Silicon and Golden Ocean into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between REC Silicon ASA and Golden Ocean Group, you can compare the effects of market volatilities on REC Silicon and Golden Ocean 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 REC Silicon with a short position of Golden Ocean. Check out your portfolio center. Please also check ongoing floating volatility patterns of REC Silicon and Golden Ocean.
Diversification Opportunities for REC Silicon and Golden Ocean
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between REC and Golden is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding REC Silicon ASA and Golden Ocean Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Ocean Group and REC Silicon 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 REC Silicon ASA are associated (or correlated) with Golden Ocean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Ocean Group has no effect on the direction of REC Silicon i.e., REC Silicon and Golden Ocean go up and down completely randomly.
Pair Corralation between REC Silicon and Golden Ocean
Assuming the 90 days trading horizon REC Silicon ASA is expected to under-perform the Golden Ocean. In addition to that, REC Silicon is 3.65 times more volatile than Golden Ocean Group. It trades about -0.29 of its total potential returns per unit of risk. Golden Ocean Group is currently generating about 0.1 per unit of volatility. If you would invest 11,740 in Golden Ocean Group on August 25, 2024 and sell it today you would earn a total of 560.00 from holding Golden Ocean Group or generate 4.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
REC Silicon ASA vs. Golden Ocean Group
Performance |
| Timeline |
| REC Silicon ASA |
| Golden Ocean Group |
REC Silicon and Golden Ocean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with REC Silicon and Golden Ocean
The main advantage of trading using opposite REC Silicon and Golden Ocean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if REC Silicon position performs unexpectedly, Golden Ocean 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 Golden Ocean will offset losses from the drop in Golden Ocean's long position.| REC Silicon vs. Aker Horizons AS | REC Silicon vs. MPC Container Ships | REC Silicon vs. Aker Carbon Capture | REC Silicon vs. Nordic Semiconductor ASA |
| Golden Ocean vs. Frontline | Golden Ocean vs. BW LPG | Golden Ocean vs. Jinhui Shipping and | Golden Ocean vs. FLEX LNG |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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