Correlation Between REC Silicon and Belships

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

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

Diversification Opportunities for REC Silicon and Belships

-0.68

Correlation Coefficient

REC Silicon  Belships

Excellent diversification

The 3 months correlation between REC and Belships is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding REC Silicon ASA and Belships in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Belships and REC Silicon 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 REC Silicon ASA 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 REC Silicon i.e., REC Silicon and Belships go up and down completely randomly.

Pair Corralation between REC Silicon and Belships

Assuming the 90 days trading horizon REC Silicon ASA is expected to under-perform the Belships. In addition to that, REC Silicon is 3.16 times more volatile than Belships. It trades about -0.15 of its total potential returns per unit of risk. Belships is currently generating about 0.07 per unit of volatility. If you would invest  1,772  in Belships on October 24, 2024 and sell it today you would earn a total of  243.00  from holding Belships or generate 13.71% return on investment over 90 days.

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

REC Silicon ASA  vs.  Belships

REC Silicon ASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days REC Silicon ASA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Belships

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Belships are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Belships displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with REC Silicon and Belships

The main advantage of trading using opposite REC Silicon and Belships positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if REC Silicon 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 REC Silicon ASA 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.