Correlation Between Clean Seas and Dolphin Drilling

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

By analyzing existing cross correlation between Clean Seas Seafood and Dolphin Drilling AS, you can compare the effects of market volatilities on Clean Seas and Dolphin Drilling 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 Clean Seas with a short position of Dolphin Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clean Seas and Dolphin Drilling.

Diversification Opportunities for Clean Seas and Dolphin Drilling

-0.66

Correlation Coefficient

Clean Seas  Dolphin Drilling

Excellent diversification

The 3 months correlation between Clean and Dolphin is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Clean Seas Seafood and Dolphin Drilling AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dolphin Drilling and Clean Seas 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 Clean Seas Seafood are associated (or correlated) with Dolphin Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dolphin Drilling has no effect on the direction of Clean Seas i.e., Clean Seas and Dolphin Drilling go up and down completely randomly.

Pair Corralation between Clean Seas and Dolphin Drilling

Assuming the 90 days trading horizon Clean Seas Seafood is expected to generate 0.69 times more return on investment than Dolphin Drilling. However, Clean Seas Seafood is 1.45 times less risky than Dolphin Drilling. It trades about 0.1 of its potential returns per unit of risk. Dolphin Drilling AS is currently generating about -0.07 per unit of risk. If you would invest  85.00  in Clean Seas Seafood on December 30, 2024 and sell it today you would earn a total of  25.00  from holding Clean Seas Seafood or generate 29.41% return on investment over 90 days.

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

Clean Seas Seafood  vs.  Dolphin Drilling AS

Clean Seas Seafood

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Clean Seas Seafood are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Clean Seas disclosed solid returns over the last few months and may actually be approaching a breakup point.

Dolphin Drilling

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dolphin Drilling AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Clean Seas and Dolphin Drilling

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

The idea behind Clean Seas Seafood and Dolphin Drilling AS 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.