Correlation Between Hoegh Autoliners and Belships

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

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

Diversification Opportunities for Hoegh Autoliners and Belships

0.54

Correlation Coefficient

Hoegh Autoliners  Belships

Very weak diversification

The 3 months correlation between Hoegh and Belships is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Hoegh Autoliners ASA and Belships in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Belships and Hoegh Autoliners 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 Hoegh Autoliners ASA are associated (or correlated) with Belships. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Belships has no effect on the direction of Hoegh Autoliners i.e., Hoegh Autoliners and Belships go up and down completely randomly.

Pair Corralation between Hoegh Autoliners and Belships

Assuming the 90 days trading horizon Hoegh Autoliners ASA is expected to generate 0.82 times more return on investment than Belships. However, Hoegh Autoliners ASA is 1.23 times less risky than Belships. It trades about 0.06 of its potential returns per unit of risk. Belships is currently generating about 0.01 per unit of risk. If you would invest  9,702  in Hoegh Autoliners ASA on October 10, 2024 and sell it today you would earn a total of  1,478  from holding Hoegh Autoliners ASA or generate 15.23% return on investment over 90 days.

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

Hoegh Autoliners ASA  vs.  Belships

Hoegh Autoliners ASA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Belships

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Belships are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Belships may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Hoegh Autoliners and Belships

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

The idea behind Hoegh Autoliners ASA and Belships 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.