Correlation Between Odfjell Technology and Instabank ASA

Can any of the company-specific risk be diversified away by investing in both Odfjell Technology and Instabank 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 Instabank 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 Instabank ASA, you can compare the effects of market volatilities on Odfjell Technology and Instabank 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 Instabank ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Odfjell Technology and Instabank ASA.

Diversification Opportunities for Odfjell Technology and Instabank ASA

0.42

Correlation Coefficient

Odfjell Technology  Instabank ASA

Very weak diversification

The 3 months correlation between Odfjell and Instabank is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Odfjell Technology and Instabank ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Instabank 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 Instabank ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Instabank ASA has no effect on the direction of Odfjell Technology i.e., Odfjell Technology and Instabank ASA go up and down completely randomly.

Pair Corralation between Odfjell Technology and Instabank ASA

Assuming the 90 days trading horizon Odfjell Technology is expected to under-perform the Instabank ASA. In addition to that, Odfjell Technology is 1.46 times more volatile than Instabank ASA. It trades about -0.01 of its total potential returns per unit of risk. Instabank ASA is currently generating about 0.03 per unit of volatility. If you would invest  195.00  in Instabank ASA on September 13, 2024 and sell it today you would earn a total of  5.00  from holding Instabank ASA or generate 2.56% return on investment over 90 days.

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

Odfjell Technology  vs.  Instabank 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.

Instabank ASA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Instabank ASA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Instabank ASA is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Odfjell Technology and Instabank ASA

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

The idea behind Odfjell Technology and Instabank 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.