Correlation Between Odfjell Drilling and Uniper SE

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

By analyzing existing cross correlation between Odfjell Drilling and Uniper SE, you can compare the effects of market volatilities on Odfjell Drilling and Uniper SE 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 Uniper SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Odfjell Drilling and Uniper SE.

Diversification Opportunities for Odfjell Drilling and Uniper SE

0.5

Correlation Coefficient

Odfjell Drilling  Uniper SE

Very weak diversification

The 3 months correlation between Odfjell and Uniper is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Odfjell Drilling and Uniper SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uniper SE 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 Uniper SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uniper SE has no effect on the direction of Odfjell Drilling i.e., Odfjell Drilling and Uniper SE go up and down completely randomly.

Pair Corralation between Odfjell Drilling and Uniper SE

Assuming the 90 days trading horizon Odfjell Drilling is expected to generate 0.78 times more return on investment than Uniper SE. However, Odfjell Drilling is 1.28 times less risky than Uniper SE. It trades about 0.16 of its potential returns per unit of risk. Uniper SE is currently generating about 0.08 per unit of risk. If you would invest  4,987  in Odfjell Drilling on December 29, 2024 and sell it today you would earn a total of  903.00  from holding Odfjell Drilling or generate 18.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Odfjell Drilling  vs.  Uniper SE

Odfjell Drilling

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Odfjell Drilling are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Odfjell Drilling unveiled solid returns over the last few months and may actually be approaching a breakup point.

Uniper SE

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Uniper SE are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Uniper SE may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Odfjell Drilling and Uniper SE

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

The idea behind Odfjell Drilling and Uniper SE 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.