Correlation Between Odfjell Drilling and Aurskog Sparebank

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

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

Diversification Opportunities for Odfjell Drilling and Aurskog Sparebank

0.46

Correlation Coefficient

Odfjell Drilling  Aurskog Sparebank

Very weak diversification

The 3 months correlation between Odfjell and Aurskog is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Odfjell Drilling and Aurskog Sparebank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurskog Sparebank and Odfjell Drilling 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 Drilling are associated (or correlated) with Aurskog Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurskog Sparebank has no effect on the direction of Odfjell Drilling i.e., Odfjell Drilling and Aurskog Sparebank go up and down completely randomly.

Pair Corralation between Odfjell Drilling and Aurskog Sparebank

Assuming the 90 days trading horizon Odfjell Drilling is expected to generate 1.6 times more return on investment than Aurskog Sparebank. However, Odfjell Drilling is 1.6 times more volatile than Aurskog Sparebank. It trades about 0.2 of its potential returns per unit of risk. Aurskog Sparebank is currently generating about 0.12 per unit of risk. If you would invest  4,900  in Odfjell Drilling on December 22, 2024 and sell it today you would earn a total of  1,130  from holding Odfjell Drilling or generate 23.06% return on investment over 90 days.

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

Odfjell Drilling  vs.  Aurskog Sparebank

Odfjell Drilling

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Odfjell Drilling are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Odfjell Drilling disclosed solid returns over the last few months and may actually be approaching a breakup point.

Aurskog Sparebank

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aurskog Sparebank are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Aurskog Sparebank may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Odfjell Drilling and Aurskog Sparebank

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

The idea behind Odfjell Drilling and Aurskog Sparebank 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.