Correlation Between Skue Sparebank and Odfjell Drilling
Can any of the company-specific risk be diversified away by investing in both Skue Sparebank and Odfjell Drilling 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 Skue Sparebank and Odfjell Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Skue Sparebank and Odfjell Drilling, you can compare the effects of market volatilities on Skue Sparebank and Odfjell Drilling 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 Skue Sparebank with a short position of Odfjell Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Skue Sparebank and Odfjell Drilling.
Diversification Opportunities for Skue Sparebank and Odfjell Drilling
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Skue and Odfjell is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Skue Sparebank and Odfjell Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Odfjell Drilling and Skue Sparebank 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 Skue Sparebank are associated (or correlated) with Odfjell Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Odfjell Drilling has no effect on the direction of Skue Sparebank i.e., Skue Sparebank and Odfjell Drilling go up and down completely randomly.
Pair Corralation between Skue Sparebank and Odfjell Drilling
Assuming the 90 days trading horizon Skue Sparebank is expected to generate 0.57 times more return on investment than Odfjell Drilling. However, Skue Sparebank is 1.74 times less risky than Odfjell Drilling. It trades about 0.06 of its potential returns per unit of risk. Odfjell Drilling is currently generating about -0.04 per unit of risk. If you would invest 23,700 in Skue Sparebank on September 1, 2024 and sell it today you would earn a total of 2,200 from holding Skue Sparebank or generate 9.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Skue Sparebank vs. Odfjell Drilling
Performance |
| Timeline |
| Skue Sparebank |
| Odfjell Drilling |
Skue Sparebank and Odfjell Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Skue Sparebank and Odfjell Drilling
The main advantage of trading using opposite Skue Sparebank and Odfjell Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Skue Sparebank position performs unexpectedly, Odfjell Drilling 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 Odfjell Drilling will offset losses from the drop in Odfjell Drilling's long position.| Skue Sparebank vs. Melhus Sparebank | Skue Sparebank vs. Sparebanken Ost | Skue Sparebank vs. Sparebanken Sor |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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