Correlation Between Romsdal Sparebank and Stolt Nielsen

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

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

Diversification Opportunities for Romsdal Sparebank and Stolt Nielsen

-0.53

Correlation Coefficient

Romsdal Sparebank  Stolt Nielsen

Excellent diversification

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

Pair Corralation between Romsdal Sparebank and Stolt Nielsen

Assuming the 90 days trading horizon Romsdal Sparebank is expected to generate 0.41 times more return on investment than Stolt Nielsen. However, Romsdal Sparebank is 2.46 times less risky than Stolt Nielsen. It trades about 0.08 of its potential returns per unit of risk. Stolt Nielsen Limited is currently generating about -0.04 per unit of risk. If you would invest  12,450  in Romsdal Sparebank on December 22, 2024 and sell it today you would earn a total of  580.00  from holding Romsdal Sparebank or generate 4.66% return on investment over 90 days.

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

Romsdal Sparebank  vs.  Stolt Nielsen Limited

Romsdal Sparebank

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Romsdal Sparebank are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Romsdal Sparebank is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Stolt Nielsen Limited

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Romsdal Sparebank and Stolt Nielsen

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

The idea behind Romsdal Sparebank and Stolt Nielsen Limited 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.