Correlation Between SD Standard and Beerenberg
Can any of the company-specific risk be diversified away by investing in both SD Standard and Beerenberg 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 SD Standard and Beerenberg into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SD Standard Drilling and Beerenberg AS, you can compare the effects of market volatilities on SD Standard and Beerenberg 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 SD Standard with a short position of Beerenberg. Check out your portfolio center. Please also check ongoing floating volatility patterns of SD Standard and Beerenberg.
Diversification Opportunities for SD Standard and Beerenberg
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SDSD and Beerenberg is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding SD Standard Drilling and Beerenberg AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beerenberg AS and SD Standard 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 SD Standard Drilling are associated (or correlated) with Beerenberg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beerenberg AS has no effect on the direction of SD Standard i.e., SD Standard and Beerenberg go up and down completely randomly.
Pair Corralation between SD Standard and Beerenberg
Assuming the 90 days trading horizon SD Standard Drilling is expected to generate 1.86 times more return on investment than Beerenberg. However, SD Standard is 1.86 times more volatile than Beerenberg AS. It trades about -0.04 of its potential returns per unit of risk. Beerenberg AS is currently generating about -0.14 per unit of risk. If you would invest 171.00 in SD Standard Drilling on September 12, 2024 and sell it today you would lose (1.00) from holding SD Standard Drilling or give up 0.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 69.57% |
| Values | Daily Returns |
SD Standard Drilling vs. Beerenberg AS
Performance |
| Timeline |
| SD Standard Drilling |
| Beerenberg AS |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
SD Standard and Beerenberg Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SD Standard and Beerenberg
The main advantage of trading using opposite SD Standard and Beerenberg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SD Standard position performs unexpectedly, Beerenberg 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 Beerenberg will offset losses from the drop in Beerenberg's long position.| SD Standard vs. Solstad Offsho | SD Standard vs. Prosafe SE | SD Standard vs. BW Offshore | SD Standard vs. Kongsberg Gruppen ASA |
| Beerenberg vs. Equinor ASA | Beerenberg vs. DnB ASA | Beerenberg vs. Aker BP ASA | Beerenberg vs. Telenor 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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