Correlation Between Stolt Nielsen and Byggma
Can any of the company-specific risk be diversified away by investing in both Stolt Nielsen and Byggma 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 Byggma 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 Byggma, you can compare the effects of market volatilities on Stolt Nielsen and Byggma 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 Byggma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stolt Nielsen and Byggma.
Diversification Opportunities for Stolt Nielsen and Byggma
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Stolt and Byggma is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Stolt Nielsen Limited and Byggma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Byggma 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 Byggma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Byggma has no effect on the direction of Stolt Nielsen i.e., Stolt Nielsen and Byggma go up and down completely randomly.
Pair Corralation between Stolt Nielsen and Byggma
Assuming the 90 days trading horizon Stolt Nielsen Limited is expected to generate 0.41 times more return on investment than Byggma. However, Stolt Nielsen Limited is 2.44 times less risky than Byggma. It trades about -0.17 of its potential returns per unit of risk. Byggma is currently generating about -0.07 per unit of risk. If you would invest 30,860 in Stolt Nielsen Limited on August 29, 2024 and sell it today you would lose (2,210) from holding Stolt Nielsen Limited or give up 7.16% 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. Byggma
Performance |
| Timeline |
| Stolt Nielsen Limited |
| Byggma |
Stolt Nielsen and Byggma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stolt Nielsen and Byggma
The main advantage of trading using opposite Stolt Nielsen and Byggma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stolt Nielsen position performs unexpectedly, Byggma 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 Byggma will offset losses from the drop in Byggma's long position.| Stolt Nielsen vs. Byggma | Stolt Nielsen vs. Gigante Salmon AS | Stolt Nielsen vs. Elkem ASA | Stolt Nielsen vs. DNB NOR KAPFORV |
| Byggma vs. AF Gruppen ASA | Byggma vs. American Shipping | Byggma vs. Arendals Fossekompani ASA | Byggma vs. Kid 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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