Correlation Between Oslo Exchange and Ocean GeoLoop

Can any of the company-specific risk be diversified away by investing in both Oslo Exchange and Ocean GeoLoop 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 Oslo Exchange and Ocean GeoLoop into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Oslo Exchange Mutual and Ocean GeoLoop AS, you can compare the effects of market volatilities on Oslo Exchange and Ocean GeoLoop 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 Oslo Exchange with a short position of Ocean GeoLoop. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oslo Exchange and Ocean GeoLoop.

Diversification Opportunities for Oslo Exchange and Ocean GeoLoop

-0.19

Correlation Coefficient

Oslo Exchange  Ocean GeoLoop

Good diversification

The 3 months correlation between Oslo and Ocean is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Oslo Exchange Mutual and Ocean GeoLoop AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ocean GeoLoop AS and Oslo Exchange 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 Oslo Exchange Mutual are associated (or correlated) with Ocean GeoLoop. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ocean GeoLoop AS has no effect on the direction of Oslo Exchange i.e., Oslo Exchange and Ocean GeoLoop go up and down completely randomly.

Pair Corralation between Oslo Exchange and Ocean GeoLoop

Assuming the 90 days trading horizon Oslo Exchange Mutual is expected to generate 0.06 times more return on investment than Ocean GeoLoop. However, Oslo Exchange Mutual is 16.61 times less risky than Ocean GeoLoop. It trades about 0.03 of its potential returns per unit of risk. Ocean GeoLoop AS is currently generating about -0.03 per unit of risk. If you would invest  140,093  in Oslo Exchange Mutual on October 10, 2024 and sell it today you would earn a total of  1,722  from holding Oslo Exchange Mutual or generate 1.23% return on investment over 90 days.

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

Oslo Exchange Mutual  vs.  Ocean GeoLoop AS

Pair Trading with Oslo Exchange and Ocean GeoLoop

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

The idea behind Oslo Exchange Mutual and Ocean GeoLoop 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.