Correlation Between Melhus Sparebank and Stolt Nielsen

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Can any of the company-specific risk be diversified away by investing in both Melhus Sparebank and Stolt Nielsen 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 Melhus Sparebank and Stolt Nielsen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Melhus Sparebank and Stolt Nielsen Limited, you can compare the effects of market volatilities on Melhus Sparebank and Stolt Nielsen 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 Melhus Sparebank with a short position of Stolt Nielsen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Melhus Sparebank and Stolt Nielsen.

Diversification Opportunities for Melhus Sparebank and Stolt Nielsen

MelhusStoltDiversified AwayMelhusStoltDiversified Away100%
-0.67
  Correlation Coefficient

Excellent diversification

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

Pair Corralation between Melhus Sparebank and Stolt Nielsen

Assuming the 90 days trading horizon Melhus Sparebank is expected to generate 1.32 times less return on investment than Stolt Nielsen. But when comparing it to its historical volatility, Melhus Sparebank is 1.88 times less risky than Stolt Nielsen. It trades about 0.04 of its potential returns per unit of risk. Stolt Nielsen Limited is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  23,686  in Stolt Nielsen Limited on September 14, 2024 and sell it today you would earn a total of  5,164  from holding Stolt Nielsen Limited or generate 21.8% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Melhus Sparebank  vs.  Stolt Nielsen Limited

 Performance 
JavaScript chart by amCharts 3.21.15OctNov -25-20-15-10-50
JavaScript chart by amCharts 3.21.15MELG SNI
       Timeline  
Melhus Sparebank 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Melhus Sparebank are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, Melhus Sparebank is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec155156157158159160161162163164
Stolt Nielsen Limited 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Stolt Nielsen Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec280300320340360380400

Melhus Sparebank and Stolt Nielsen Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-2.42-1.82-1.21-0.60.00.61.231.852.483.1 0.10.20.30.40.50.6
JavaScript chart by amCharts 3.21.15MELG SNI
       Returns  

Pair Trading with Melhus Sparebank and Stolt Nielsen

The main advantage of trading using opposite Melhus Sparebank and Stolt Nielsen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Melhus Sparebank position performs unexpectedly, Stolt Nielsen 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 Stolt Nielsen will offset losses from the drop in Stolt Nielsen's long position.
The idea behind Melhus Sparebank and Stolt Nielsen Limited 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.

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