Correlation Between Odfjell Drilling and Prosiebensat

Can any of the company-specific risk be diversified away by investing in both Odfjell Drilling and Prosiebensat 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 Odfjell Drilling and Prosiebensat into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Odfjell Drilling and Prosiebensat 1 Media, you can compare the effects of market volatilities on Odfjell Drilling and Prosiebensat 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 Odfjell Drilling with a short position of Prosiebensat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Odfjell Drilling and Prosiebensat.

Diversification Opportunities for Odfjell Drilling and Prosiebensat

0.16

Correlation Coefficient

Odfjell Drilling  Prosiebensat

Average diversification

The 3 months correlation between Odfjell and Prosiebensat is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Odfjell Drilling and Prosiebensat 1 Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prosiebensat 1 Media and Odfjell Drilling 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 Odfjell Drilling are associated (or correlated) with Prosiebensat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prosiebensat 1 Media has no effect on the direction of Odfjell Drilling i.e., Odfjell Drilling and Prosiebensat go up and down completely randomly.

Pair Corralation between Odfjell Drilling and Prosiebensat

Assuming the 90 days trading horizon Odfjell Drilling is expected to generate 0.8 times more return on investment than Prosiebensat. However, Odfjell Drilling is 1.24 times less risky than Prosiebensat. It trades about 0.08 of its potential returns per unit of risk. Prosiebensat 1 Media is currently generating about -0.04 per unit of risk. If you would invest  2,412  in Odfjell Drilling on September 29, 2024 and sell it today you would earn a total of  2,741  from holding Odfjell Drilling or generate 113.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.16%
Values	Daily Returns

Odfjell Drilling  vs.  Prosiebensat 1 Media

Odfjell Drilling

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Odfjell Drilling are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Odfjell Drilling is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Prosiebensat 1 Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Prosiebensat 1 Media has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Odfjell Drilling and Prosiebensat

The main advantage of trading using opposite Odfjell Drilling and Prosiebensat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Odfjell Drilling position performs unexpectedly, Prosiebensat 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 Prosiebensat will offset losses from the drop in Prosiebensat's long position.

The idea behind Odfjell Drilling and Prosiebensat 1 Media 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.

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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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.