Correlation Between SFL and Oceanpal

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

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

Diversification Opportunities for SFL and Oceanpal

0.85

Correlation Coefficient

SFL  Oceanpal

Very poor diversification

The 3 months correlation between SFL and Oceanpal is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding SFL Corp. and Oceanpal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oceanpal and SFL 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 SFL Corporation are associated (or correlated) with Oceanpal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oceanpal has no effect on the direction of SFL i.e., SFL and Oceanpal go up and down completely randomly.

Pair Corralation between SFL and Oceanpal

Considering the 90-day investment horizon SFL Corporation is expected to generate 0.64 times more return on investment than Oceanpal. However, SFL Corporation is 1.56 times less risky than Oceanpal. It trades about -0.13 of its potential returns per unit of risk. Oceanpal is currently generating about -0.09 per unit of risk. If you would invest  976.00  in SFL Corporation on December 26, 2024 and sell it today you would lose (158.00) from holding SFL Corporation or give up 16.19% of portfolio value over 90 days.

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

SFL Corp.  vs.  Oceanpal

SFL Corporation

Risk-Adjusted Performance

Very Weak

Over the last 90 days SFL Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Oceanpal

Risk-Adjusted Performance

Very Weak

Over the last 90 days Oceanpal has generated negative risk-adjusted returns adding no value to investors with long positions. Even with conflicting performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with SFL and Oceanpal

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

The idea behind SFL Corporation and Oceanpal 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.