Correlation Between Odfjell Drilling and Xplora Technologies

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

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

Diversification Opportunities for Odfjell Drilling and Xplora Technologies

0.13

Correlation Coefficient

Odfjell Drilling  Xplora Technologies

Average diversification

The 3 months correlation between Odfjell and Xplora is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Odfjell Drilling and Xplora Technologies As in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xplora Technologies 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 Xplora Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xplora Technologies has no effect on the direction of Odfjell Drilling i.e., Odfjell Drilling and Xplora Technologies go up and down completely randomly.

Pair Corralation between Odfjell Drilling and Xplora Technologies

Assuming the 90 days trading horizon Odfjell Drilling is expected to generate 0.82 times more return on investment than Xplora Technologies. However, Odfjell Drilling is 1.23 times less risky than Xplora Technologies. It trades about 0.14 of its potential returns per unit of risk. Xplora Technologies As is currently generating about -0.06 per unit of risk. If you would invest  5,017  in Odfjell Drilling on December 30, 2024 and sell it today you would earn a total of  873.00  from holding Odfjell Drilling or generate 17.4% return on investment over 90 days.

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

Odfjell Drilling  vs.  Xplora Technologies As

Odfjell Drilling

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Odfjell Drilling are ranked lower than 11 (%) 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.

Xplora Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Xplora Technologies As has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Odfjell Drilling and Xplora Technologies

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

The idea behind Odfjell Drilling and Xplora Technologies As 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.