Correlation Between Okea ASA and 2020 Bulkers

Can any of the company-specific risk be diversified away by investing in both Okea ASA and 2020 Bulkers 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 Okea ASA and 2020 Bulkers into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Okea ASA and 2020 Bulkers, you can compare the effects of market volatilities on Okea ASA and 2020 Bulkers 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 Okea ASA with a short position of 2020 Bulkers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okea ASA and 2020 Bulkers.

Diversification Opportunities for Okea ASA and 2020 Bulkers

0.47

Correlation Coefficient

Okea ASA  2020 Bulkers

Very weak diversification

The 3 months correlation between Okea and 2020 is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Okea ASA and 2020 Bulkers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 2020 Bulkers and Okea ASA 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 Okea ASA are associated (or correlated) with 2020 Bulkers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 2020 Bulkers has no effect on the direction of Okea ASA i.e., Okea ASA and 2020 Bulkers go up and down completely randomly.

Pair Corralation between Okea ASA and 2020 Bulkers

Assuming the 90 days trading horizon Okea ASA is expected to under-perform the 2020 Bulkers. But the stock apears to be less risky and, when comparing its historical volatility, Okea ASA is 1.2 times less risky than 2020 Bulkers. The stock trades about -0.35 of its potential returns per unit of risk. The 2020 Bulkers is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  13,187  in 2020 Bulkers on August 31, 2024 and sell it today you would lose (287.00) from holding 2020 Bulkers or give up 2.18% of portfolio value over 90 days.

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

Okea ASA  vs.  2020 Bulkers

Okea ASA

Risk-Adjusted Performance

0 of 100

Very Weak

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

2020 Bulkers

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 2020 Bulkers has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, 2020 Bulkers 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 Okea ASA and 2020 Bulkers

The main advantage of trading using opposite Okea ASA and 2020 Bulkers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okea ASA position performs unexpectedly, 2020 Bulkers 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 2020 Bulkers will offset losses from the drop in 2020 Bulkers' long position.

The idea behind Okea ASA and 2020 Bulkers 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.