Correlation Between Shelf Drilling and HAV Group

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

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

Diversification Opportunities for Shelf Drilling and HAV Group

0.04

Correlation Coefficient

Shelf Drilling  HAV Group

Significant diversification

The 3 months correlation between Shelf and HAV is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Shelf Drilling and HAV Group ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HAV Group ASA and Shelf Drilling 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 Shelf Drilling are associated (or correlated) with HAV Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HAV Group ASA has no effect on the direction of Shelf Drilling i.e., Shelf Drilling and HAV Group go up and down completely randomly.

Pair Corralation between Shelf Drilling and HAV Group

Assuming the 90 days trading horizon Shelf Drilling is expected to under-perform the HAV Group. But the stock apears to be less risky and, when comparing its historical volatility, Shelf Drilling is 1.31 times less risky than HAV Group. The stock trades about -0.1 of its potential returns per unit of risk. The HAV Group ASA is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  628.00  in HAV Group ASA on December 29, 2024 and sell it today you would earn a total of  108.00  from holding HAV Group ASA or generate 17.2% return on investment over 90 days.

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

Shelf Drilling  vs.  HAV Group ASA

Shelf Drilling

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shelf Drilling has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's essential 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.

HAV Group ASA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in HAV Group ASA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, HAV Group disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shelf Drilling and HAV Group

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

The idea behind Shelf Drilling and HAV Group 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.