Correlation Between Odfjell SE and Stolt Nielsen

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

By analyzing existing cross correlation between Odfjell SE and Stolt Nielsen Limited, you can compare the effects of market volatilities on Odfjell SE 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 Odfjell SE with a short position of Stolt Nielsen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Odfjell SE and Stolt Nielsen.

Diversification Opportunities for Odfjell SE and Stolt Nielsen

0.9

Correlation Coefficient

Odfjell SE  Stolt Nielsen

Almost no diversification

The 3 months correlation between Odfjell and Stolt is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Odfjell SE 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 Odfjell SE 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 Odfjell SE 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 Odfjell SE i.e., Odfjell SE and Stolt Nielsen go up and down completely randomly.

Pair Corralation between Odfjell SE and Stolt Nielsen

Assuming the 90 days trading horizon Odfjell SE is expected to generate 1.03 times more return on investment than Stolt Nielsen. However, Odfjell SE is 1.03 times more volatile than Stolt Nielsen Limited. It trades about -0.07 of its potential returns per unit of risk. Stolt Nielsen Limited is currently generating about -0.07 per unit of risk. If you would invest  10,798  in Odfjell SE on December 30, 2024 and sell it today you would lose (1,428) from holding Odfjell SE or give up 13.22% of portfolio value over 90 days.

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

Odfjell SE  vs.  Stolt Nielsen Limited

Odfjell SE

Risk-Adjusted Performance

Very Weak

Over the last 90 days Odfjell SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's technical and fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Stolt Nielsen Limited

Risk-Adjusted Performance

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 latest unfluctuating performance, the Stock's forward indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Odfjell SE and Stolt Nielsen

The main advantage of trading using opposite Odfjell SE and Stolt Nielsen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Odfjell SE 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 Odfjell SE 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.