Correlation Between Western Bulk and AF Gruppen
Can any of the company-specific risk be diversified away by investing in both Western Bulk and AF Gruppen 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 Western Bulk and AF Gruppen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Bulk Chartering and AF Gruppen ASA, you can compare the effects of market volatilities on Western Bulk and AF Gruppen 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 Western Bulk with a short position of AF Gruppen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Bulk and AF Gruppen.
Diversification Opportunities for Western Bulk and AF Gruppen
-0.87 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Western and AFG is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Western Bulk Chartering and AF Gruppen ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AF Gruppen ASA and Western Bulk 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 Western Bulk Chartering are associated (or correlated) with AF Gruppen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AF Gruppen ASA has no effect on the direction of Western Bulk i.e., Western Bulk and AF Gruppen go up and down completely randomly.
Pair Corralation between Western Bulk and AF Gruppen
Assuming the 90 days trading horizon Western Bulk Chartering is expected to under-perform the AF Gruppen. In addition to that, Western Bulk is 1.8 times more volatile than AF Gruppen ASA. It trades about -0.07 of its total potential returns per unit of risk. AF Gruppen ASA is currently generating about 0.05 per unit of volatility. If you would invest 12,528 in AF Gruppen ASA on September 1, 2024 and sell it today you would earn a total of 1,432 from holding AF Gruppen ASA or generate 11.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.47% |
| Values | Daily Returns |
Western Bulk Chartering vs. AF Gruppen ASA
Performance |
| Timeline |
| Western Bulk Chartering |
| AF Gruppen ASA |
Western Bulk and AF Gruppen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Bulk and AF Gruppen
The main advantage of trading using opposite Western Bulk and AF Gruppen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Bulk position performs unexpectedly, AF Gruppen 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 AF Gruppen will offset losses from the drop in AF Gruppen's long position.| Western Bulk vs. Havila Shipping ASA | Western Bulk vs. Shelf Drilling | Western Bulk vs. Solstad Offsho | Western Bulk vs. Eidesvik Offshore ASA |
| AF Gruppen vs. Veidekke ASA | AF Gruppen vs. Gjensidige Forsikring ASA | AF Gruppen vs. Orkla ASA | AF Gruppen vs. Kongsberg Gruppen 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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