Correlation Between Zalaris ASA and Stolt Nielsen
Can any of the company-specific risk be diversified away by investing in both Zalaris ASA and Stolt Nielsen 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 Zalaris ASA and Stolt Nielsen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zalaris ASA and Stolt Nielsen Limited, you can compare the effects of market volatilities on Zalaris ASA and Stolt Nielsen 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 Zalaris ASA with a short position of Stolt Nielsen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zalaris ASA and Stolt Nielsen.
Diversification Opportunities for Zalaris ASA and Stolt Nielsen
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Zalaris and Stolt is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Zalaris ASA and Stolt Nielsen Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stolt Nielsen Limited and Zalaris ASA 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 Zalaris ASA are associated (or correlated) with Stolt Nielsen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stolt Nielsen Limited has no effect on the direction of Zalaris ASA i.e., Zalaris ASA and Stolt Nielsen go up and down completely randomly.
Pair Corralation between Zalaris ASA and Stolt Nielsen
Assuming the 90 days trading horizon Zalaris ASA is expected to generate 0.89 times more return on investment than Stolt Nielsen. However, Zalaris ASA is 1.12 times less risky than Stolt Nielsen. It trades about -0.04 of its potential returns per unit of risk. Stolt Nielsen Limited is currently generating about -0.18 per unit of risk. If you would invest 7,600 in Zalaris ASA on September 3, 2024 and sell it today you would lose (800.00) from holding Zalaris ASA or give up 10.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zalaris ASA vs. Stolt Nielsen Limited
Performance |
| Timeline |
| Zalaris ASA |
| Stolt Nielsen Limited |
Zalaris ASA and Stolt Nielsen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zalaris ASA and Stolt Nielsen
The main advantage of trading using opposite Zalaris ASA and Stolt Nielsen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zalaris ASA position performs unexpectedly, Stolt Nielsen 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 Stolt Nielsen will offset losses from the drop in Stolt Nielsen's long position.The idea behind Zalaris ASA and Stolt Nielsen Limited pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Stolt Nielsen vs. SpareBank 1 stlandet | Stolt Nielsen vs. Xplora Technologies As | Stolt Nielsen vs. Nordic Mining ASA | Stolt Nielsen vs. Dolphin Drilling AS |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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