Correlation Between Stolt Nielsen and Bergen Carbon
Can any of the company-specific risk be diversified away by investing in both Stolt Nielsen and Bergen Carbon 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 Stolt Nielsen and Bergen Carbon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stolt Nielsen Limited and Bergen Carbon Solutions, you can compare the effects of market volatilities on Stolt Nielsen and Bergen Carbon 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 Stolt Nielsen with a short position of Bergen Carbon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stolt Nielsen and Bergen Carbon.
Diversification Opportunities for Stolt Nielsen and Bergen Carbon
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Stolt and Bergen is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Stolt Nielsen Limited and Bergen Carbon Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bergen Carbon Solutions and Stolt Nielsen 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 Stolt Nielsen Limited are associated (or correlated) with Bergen Carbon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bergen Carbon Solutions has no effect on the direction of Stolt Nielsen i.e., Stolt Nielsen and Bergen Carbon go up and down completely randomly.
Pair Corralation between Stolt Nielsen and Bergen Carbon
Assuming the 90 days trading horizon Stolt Nielsen Limited is expected to generate 0.34 times more return on investment than Bergen Carbon. However, Stolt Nielsen Limited is 2.92 times less risky than Bergen Carbon. It trades about -0.16 of its potential returns per unit of risk. Bergen Carbon Solutions is currently generating about -0.08 per unit of risk. If you would invest 29,905 in Stolt Nielsen Limited on September 1, 2024 and sell it today you would lose (1,905) from holding Stolt Nielsen Limited or give up 6.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stolt Nielsen Limited vs. Bergen Carbon Solutions
Performance |
| Timeline |
| Stolt Nielsen Limited |
| Bergen Carbon Solutions |
Stolt Nielsen and Bergen Carbon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stolt Nielsen and Bergen Carbon
The main advantage of trading using opposite Stolt Nielsen and Bergen Carbon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stolt Nielsen position performs unexpectedly, Bergen Carbon 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 Bergen Carbon will offset losses from the drop in Bergen Carbon's long position.| Stolt Nielsen vs. Nordic Mining ASA | Stolt Nielsen vs. Romerike Sparebank | Stolt Nielsen vs. Norwegian Air Shuttle | Stolt Nielsen vs. Xplora Technologies As |
| Bergen Carbon vs. Horisont Energi AS | Bergen Carbon vs. Integrated Wind Solutions | Bergen Carbon vs. Vow ASA | Bergen Carbon 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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