Correlation Between Odfjell B and Odfjell SE

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

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

Diversification Opportunities for Odfjell B and Odfjell SE

0.97

Correlation Coefficient

Odfjell B  Odfjell SE

Almost no diversification

The 3 months correlation between Odfjell and Odfjell is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Odfjell B and Odfjell SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Odfjell SE and Odfjell B 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 B are associated (or correlated) with Odfjell SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Odfjell SE has no effect on the direction of Odfjell B i.e., Odfjell B and Odfjell SE go up and down completely randomly.

Pair Corralation between Odfjell B and Odfjell SE

Assuming the 90 days trading horizon Odfjell B is expected to generate 1.06 times more return on investment than Odfjell SE. However, Odfjell B is 1.06 times more volatile than Odfjell SE. It trades about 0.04 of its potential returns per unit of risk. Odfjell SE is currently generating about 0.04 per unit of risk. If you would invest  7,050  in Odfjell B on December 2, 2024 and sell it today you would earn a total of  2,530  from holding Odfjell B or generate 35.89% return on investment over 90 days.

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

Odfjell B  vs.  Odfjell SE

Odfjell B

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Odfjell B are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, Odfjell B is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

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 quite persistent technical and fundamental indicators, Odfjell SE is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Odfjell B and Odfjell SE

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

The idea behind Odfjell B and Odfjell SE 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..