Correlation Between Odfjell Technology and BlueNord ASA

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

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

Diversification Opportunities for Odfjell Technology and BlueNord ASA

-0.53

Correlation Coefficient

Odfjell Technology  BlueNord ASA

Excellent diversification

The 3 months correlation between Odfjell and BlueNord is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Odfjell Technology and BlueNord ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlueNord ASA 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 BlueNord ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlueNord ASA has no effect on the direction of Odfjell Technology i.e., Odfjell Technology and BlueNord ASA go up and down completely randomly.

Pair Corralation between Odfjell Technology and BlueNord ASA

Assuming the 90 days trading horizon Odfjell Technology is expected to generate 1.16 times less return on investment than BlueNord ASA. In addition to that, Odfjell Technology is 1.6 times more volatile than BlueNord ASA. It trades about 0.04 of its total potential returns per unit of risk. BlueNord ASA is currently generating about 0.08 per unit of volatility. If you would invest  37,000  in BlueNord ASA on October 7, 2024 and sell it today you would earn a total of  31,600  from holding BlueNord ASA or generate 85.41% return on investment over 90 days.

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

Odfjell Technology  vs.  BlueNord ASA

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.

BlueNord ASA

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BlueNord ASA are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, BlueNord ASA disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Odfjell Technology and BlueNord ASA

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

The idea behind Odfjell Technology and BlueNord ASA 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.