Correlation Between SD Standard and Deep Value
Can any of the company-specific risk be diversified away by investing in both SD Standard and Deep Value 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 Deep Value 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 Deep Value Driller, you can compare the effects of market volatilities on SD Standard and Deep Value 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 Deep Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of SD Standard and Deep Value.
Diversification Opportunities for SD Standard and Deep Value
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SDSD and Deep is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding SD Standard Drilling and Deep Value Driller in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deep Value Driller 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 Deep Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deep Value Driller has no effect on the direction of SD Standard i.e., SD Standard and Deep Value go up and down completely randomly.
Pair Corralation between SD Standard and Deep Value
Assuming the 90 days trading horizon SD Standard Drilling is expected to generate 0.31 times more return on investment than Deep Value. However, SD Standard Drilling is 3.18 times less risky than Deep Value. It trades about 0.1 of its potential returns per unit of risk. Deep Value Driller is currently generating about -0.44 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 | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SD Standard Drilling vs. Deep Value Driller
Performance |
| Timeline |
| SD Standard Drilling |
| Deep Value Driller |
SD Standard and Deep Value Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SD Standard and Deep Value
The main advantage of trading using opposite SD Standard and Deep Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SD Standard position performs unexpectedly, Deep Value 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 Deep Value will offset losses from the drop in Deep Value's long position.| SD Standard vs. Odfjell Drilling | SD Standard vs. Solstad Offsho | SD Standard vs. Reach Subsea | SD Standard vs. Eidesvik Offshore ASA |
| Deep Value vs. Romerike Sparebank | Deep Value vs. Norwegian Air Shuttle | Deep Value vs. Clean Seas Seafood | Deep Value vs. Proximar Seafood AS |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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