Correlation Between Ardmore Shpng and EURN Old

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

By analyzing existing cross correlation between Ardmore Shpng and EURN Old, you can compare the effects of market volatilities on Ardmore Shpng and EURN Old 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 Ardmore Shpng with a short position of EURN Old. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ardmore Shpng and EURN Old.

Diversification Opportunities for Ardmore Shpng and EURN Old

-0.67

Correlation Coefficient

Ardmore Shpng  EURN Old

Excellent diversification

The 3 months correlation between Ardmore and EURN is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Ardmore Shpng and EURN Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EURN Old and Ardmore Shpng 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 Ardmore Shpng are associated (or correlated) with EURN Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EURN Old has no effect on the direction of Ardmore Shpng i.e., Ardmore Shpng and EURN Old go up and down completely randomly.

Pair Corralation between Ardmore Shpng and EURN Old

Considering the 90-day investment horizon Ardmore Shpng is expected to generate 8.16 times less return on investment than EURN Old. In addition to that, Ardmore Shpng is 1.09 times more volatile than EURN Old. It trades about 0.01 of its total potential returns per unit of risk. EURN Old is currently generating about 0.08 per unit of volatility. If you would invest  906.00  in EURN Old on October 22, 2024 and sell it today you would earn a total of  725.00  from holding EURN Old or generate 80.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	73.59%
Values	Daily Returns

Ardmore Shpng  vs.  EURN Old

Ardmore Shpng

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ardmore Shpng has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

EURN Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EURN Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, EURN Old is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Ardmore Shpng and EURN Old

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

The idea behind Ardmore Shpng and EURN Old 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.