Correlation Between Odfjell Technology and Belships

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

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

Diversification Opportunities for Odfjell Technology and Belships

-0.01

Correlation Coefficient

Odfjell Technology  Belships

Good diversification

The 3 months correlation between Odfjell and Belships is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Odfjell Technology and Belships in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Belships and Odfjell Technology 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 Technology are associated (or correlated) with Belships. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Belships has no effect on the direction of Odfjell Technology i.e., Odfjell Technology and Belships go up and down completely randomly.

Pair Corralation between Odfjell Technology and Belships

Assuming the 90 days trading horizon Odfjell Technology is expected to generate 9.7 times less return on investment than Belships. But when comparing it to its historical volatility, Odfjell Technology is 2.51 times less risky than Belships. It trades about 0.05 of its potential returns per unit of risk. Belships is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  1,668  in Belships on October 11, 2024 and sell it today you would earn a total of  342.00  from holding Belships or generate 20.5% return on investment over 90 days.

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

Odfjell Technology  vs.  Belships

Odfjell Technology

Risk-Adjusted Performance

0 of 100

Very Weak

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

Belships

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Belships are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Belships may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Odfjell Technology and Belships

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

The idea behind Odfjell Technology and Belships 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.