Correlation Between Var Energi and Belships
Can any of the company-specific risk be diversified away by investing in both Var Energi and Belships 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 Var Energi and Belships into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Var Energi ASA and Belships, you can compare the effects of market volatilities on Var Energi and Belships 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 Var Energi with a short position of Belships. Check out your portfolio center. Please also check ongoing floating volatility patterns of Var Energi and Belships.
Diversification Opportunities for Var Energi and Belships
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Var and Belships is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Var Energi ASA and Belships in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Belships and Var Energi 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 Var Energi ASA are associated (or correlated) with Belships. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Belships has no effect on the direction of Var Energi i.e., Var Energi and Belships go up and down completely randomly.
Pair Corralation between Var Energi and Belships
Assuming the 90 days trading horizon Var Energi is expected to generate 1.21 times less return on investment than Belships. But when comparing it to its historical volatility, Var Energi ASA is 1.58 times less risky than Belships. It trades about 0.14 of its potential returns per unit of risk. Belships is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,723 in Belships on September 1, 2024 and sell it today you would earn a total of 97.00 from holding Belships or generate 5.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Var Energi ASA vs. Belships
Performance |
| Timeline |
| Var Energi ASA |
| Belships |
Var Energi and Belships Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Var Energi and Belships
The main advantage of trading using opposite Var Energi and Belships positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Var Energi position performs unexpectedly, Belships 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 Belships will offset losses from the drop in Belships' long position.| Var Energi vs. Aker BP ASA | Var Energi vs. Belships | Var Energi vs. MPC Container Ships | Var Energi vs. BW Energy |
| Belships vs. Havila Shipping ASA | Belships vs. Shelf Drilling | Belships vs. Solstad Offsho | Belships vs. Eidesvik Offshore 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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