Correlation Between Odfjell Drilling and Nordic Technology

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

By analyzing existing cross correlation between Odfjell Drilling and Nordic Technology Group, you can compare the effects of market volatilities on Odfjell Drilling and Nordic Technology 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 Nordic Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Odfjell Drilling and Nordic Technology.

Diversification Opportunities for Odfjell Drilling and Nordic Technology

0.33

Correlation Coefficient

Odfjell Drilling  Nordic Technology

Weak diversification

The 3 months correlation between Odfjell and Nordic is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Odfjell Drilling and Nordic Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordic Technology 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 Nordic Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordic Technology has no effect on the direction of Odfjell Drilling i.e., Odfjell Drilling and Nordic Technology go up and down completely randomly.

Pair Corralation between Odfjell Drilling and Nordic Technology

Assuming the 90 days trading horizon Odfjell Drilling is expected to under-perform the Nordic Technology. But the stock apears to be less risky and, when comparing its historical volatility, Odfjell Drilling is 3.02 times less risky than Nordic Technology. The stock trades about -0.02 of its potential returns per unit of risk. The Nordic Technology Group is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  330.00  in Nordic Technology Group on September 3, 2024 and sell it today you would lose (60.00) from holding Nordic Technology Group or give up 18.18% of portfolio value over 90 days.

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

Odfjell Drilling  vs.  Nordic Technology Group

Odfjell Drilling

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Odfjell Drilling has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Odfjell Drilling is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Nordic Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nordic Technology Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating 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.

Pair Trading with Odfjell Drilling and Nordic Technology

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

The idea behind Odfjell Drilling and Nordic Technology Group 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.