Correlation Between Nordic American and Oceanpal

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

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

Diversification Opportunities for Nordic American and Oceanpal

0.89

Correlation Coefficient

Nordic American  Oceanpal

Very poor diversification

The 3 months correlation between Nordic and Oceanpal is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Nordic American Tankers and Oceanpal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oceanpal and Nordic American 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 Nordic American Tankers are associated (or correlated) with Oceanpal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oceanpal has no effect on the direction of Nordic American i.e., Nordic American and Oceanpal go up and down completely randomly.

Pair Corralation between Nordic American and Oceanpal

Considering the 90-day investment horizon Nordic American Tankers is expected to under-perform the Oceanpal. But the stock apears to be less risky and, when comparing its historical volatility, Nordic American Tankers is 1.58 times less risky than Oceanpal. The stock trades about -0.2 of its potential returns per unit of risk. The Oceanpal is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest  156.00  in Oceanpal on October 3, 2024 and sell it today you would lose (42.00) from holding Oceanpal or give up 26.92% of portfolio value over 90 days.

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

Nordic American Tankers  vs.  Oceanpal

Nordic American Tankers

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nordic American Tankers 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 comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Oceanpal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oceanpal has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Nordic American and Oceanpal

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

The idea behind Nordic American Tankers and Oceanpal 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.