Correlation Between SD Standard and Clean Seas
Can any of the company-specific risk be diversified away by investing in both SD Standard and Clean Seas 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 Clean Seas 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 Clean Seas Seafood, you can compare the effects of market volatilities on SD Standard and Clean Seas 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 Clean Seas. Check out your portfolio center. Please also check ongoing floating volatility patterns of SD Standard and Clean Seas.
Diversification Opportunities for SD Standard and Clean Seas
-0.86 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between SDSD and Clean is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding SD Standard Drilling and Clean Seas Seafood in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clean Seas Seafood 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 Clean Seas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clean Seas Seafood has no effect on the direction of SD Standard i.e., SD Standard and Clean Seas go up and down completely randomly.
Pair Corralation between SD Standard and Clean Seas
Assuming the 90 days trading horizon SD Standard Drilling is expected to generate 0.11 times more return on investment than Clean Seas. However, SD Standard Drilling is 9.15 times less risky than Clean Seas. It trades about 0.1 of its potential returns per unit of risk. Clean Seas Seafood is currently generating about -0.32 per unit of risk. If you would invest 169.00 in SD Standard Drilling on August 29, 2024 and sell it today you would earn a total of 2.00 from holding SD Standard Drilling or generate 1.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SD Standard Drilling vs. Clean Seas Seafood
Performance |
| Timeline |
| SD Standard Drilling |
| Clean Seas Seafood |
SD Standard and Clean Seas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SD Standard and Clean Seas
The main advantage of trading using opposite SD Standard and Clean Seas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SD Standard position performs unexpectedly, Clean Seas 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 Clean Seas will offset losses from the drop in Clean Seas' long position.| SD Standard vs. Odfjell Drilling | SD Standard vs. Solstad Offsho | SD Standard vs. Reach Subsea | SD Standard vs. Eidesvik Offshore ASA |
| Clean Seas vs. Andfjord Salmon AS | Clean Seas vs. Elkem ASA | Clean Seas vs. Vow ASA | Clean Seas vs. North Energy 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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