Correlation Between Stolt Nielsen and Carasent ASA

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

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

Diversification Opportunities for Stolt Nielsen and Carasent ASA

-0.84

Correlation Coefficient

Stolt Nielsen  Carasent ASA

Pay attention - limited upside

The 3 months correlation between Stolt and Carasent is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Stolt Nielsen Limited and Carasent ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carasent ASA and Stolt Nielsen 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 Stolt Nielsen Limited are associated (or correlated) with Carasent ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carasent ASA has no effect on the direction of Stolt Nielsen i.e., Stolt Nielsen and Carasent ASA go up and down completely randomly.

Pair Corralation between Stolt Nielsen and Carasent ASA

Assuming the 90 days trading horizon Stolt Nielsen Limited is expected to under-perform the Carasent ASA. But the stock apears to be less risky and, when comparing its historical volatility, Stolt Nielsen Limited is 1.11 times less risky than Carasent ASA. The stock trades about -0.27 of its potential returns per unit of risk. The Carasent ASA is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,815  in Carasent ASA on August 31, 2024 and sell it today you would earn a total of  140.00  from holding Carasent ASA or generate 7.71% return on investment over 90 days.

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

Stolt Nielsen Limited  vs.  Carasent ASA

Stolt Nielsen Limited

Risk-Adjusted Performance

0 of 100

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 conflicting performance in the last few months, the Stock's forward indicators remain quite persistent which may send shares a bit higher in December 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Carasent ASA

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Carasent ASA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Carasent ASA may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Stolt Nielsen and Carasent ASA

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

The idea behind Stolt Nielsen Limited and Carasent 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..