Correlation Between Odfjell Drilling and Lindsell Train

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

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

Diversification Opportunities for Odfjell Drilling and Lindsell Train

0.18

Correlation Coefficient

Odfjell Drilling  Lindsell Train

Average diversification

The 3 months correlation between Odfjell and Lindsell is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Odfjell Drilling and Lindsell Train Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lindsell Train Investment 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 Lindsell Train. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lindsell Train Investment has no effect on the direction of Odfjell Drilling i.e., Odfjell Drilling and Lindsell Train go up and down completely randomly.

Pair Corralation between Odfjell Drilling and Lindsell Train

Assuming the 90 days trading horizon Odfjell Drilling is expected to generate 1.5 times more return on investment than Lindsell Train. However, Odfjell Drilling is 1.5 times more volatile than Lindsell Train Investment. It trades about 0.08 of its potential returns per unit of risk. Lindsell Train Investment is currently generating about -0.03 per unit of risk. If you would invest  2,385  in Odfjell Drilling on September 19, 2024 and sell it today you would earn a total of  2,615  from holding Odfjell Drilling or generate 109.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.4%
Values	Daily Returns

Odfjell Drilling  vs.  Lindsell Train Investment

Odfjell Drilling

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Odfjell Drilling has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Odfjell Drilling is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Lindsell Train Investment

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lindsell Train Investment are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Lindsell Train is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Odfjell Drilling and Lindsell Train

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

The idea behind Odfjell Drilling and Lindsell Train Investment 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.