Correlation Between Odfjell Drilling and Helgeland Sparebank

Can any of the company-specific risk be diversified away by investing in both Odfjell Drilling and Helgeland 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 Helgeland 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 Helgeland Sparebank, you can compare the effects of market volatilities on Odfjell Drilling and Helgeland 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 Helgeland Sparebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Odfjell Drilling and Helgeland Sparebank.

Diversification Opportunities for Odfjell Drilling and Helgeland Sparebank

0.49

Correlation Coefficient

Odfjell Drilling  Helgeland Sparebank

Very weak diversification

The 3 months correlation between Odfjell and Helgeland is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Odfjell Drilling and Helgeland Sparebank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Helgeland 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 Helgeland Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Helgeland Sparebank has no effect on the direction of Odfjell Drilling i.e., Odfjell Drilling and Helgeland Sparebank go up and down completely randomly.

Pair Corralation between Odfjell Drilling and Helgeland Sparebank

Assuming the 90 days trading horizon Odfjell Drilling is expected to generate 1.82 times more return on investment than Helgeland Sparebank. However, Odfjell Drilling is 1.82 times more volatile than Helgeland Sparebank. It trades about 0.13 of its potential returns per unit of risk. Helgeland Sparebank is currently generating about 0.07 per unit of risk. If you would invest  5,203  in Odfjell Drilling on October 21, 2024 and sell it today you would earn a total of  897.00  from holding Odfjell Drilling or generate 17.24% 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.  Helgeland Sparebank

Odfjell Drilling

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Odfjell Drilling are ranked lower than 10 (%) 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.

Helgeland Sparebank

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Helgeland Sparebank are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, Helgeland Sparebank 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 Drilling and Helgeland Sparebank

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

The idea behind Odfjell Drilling and Helgeland 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.