Correlation Between Stolt Nielsen and Romsdal Sparebank
Can any of the company-specific risk be diversified away by investing in both Stolt Nielsen and Romsdal Sparebank 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 Romsdal Sparebank 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 Romsdal Sparebank, you can compare the effects of market volatilities on Stolt Nielsen and Romsdal Sparebank 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 Romsdal Sparebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stolt Nielsen and Romsdal Sparebank.
Diversification Opportunities for Stolt Nielsen and Romsdal Sparebank
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Stolt and Romsdal is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Stolt Nielsen Limited and Romsdal Sparebank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Romsdal Sparebank 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 Romsdal Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Romsdal Sparebank has no effect on the direction of Stolt Nielsen i.e., Stolt Nielsen and Romsdal Sparebank go up and down completely randomly.
Pair Corralation between Stolt Nielsen and Romsdal Sparebank
Assuming the 90 days trading horizon Stolt Nielsen Limited is expected to generate 2.57 times more return on investment than Romsdal Sparebank. However, Stolt Nielsen is 2.57 times more volatile than Romsdal Sparebank. It trades about 0.05 of its potential returns per unit of risk. Romsdal Sparebank is currently generating about 0.09 per unit of risk. If you would invest 29,000 in Stolt Nielsen Limited on October 10, 2024 and sell it today you would earn a total of 500.00 from holding Stolt Nielsen Limited or generate 1.72% 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. Romsdal Sparebank
Performance |
Timeline |
Stolt Nielsen Limited |
Romsdal Sparebank |
Stolt Nielsen and Romsdal Sparebank Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Stolt Nielsen and Romsdal Sparebank
The main advantage of trading using opposite Stolt Nielsen and Romsdal Sparebank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stolt Nielsen position performs unexpectedly, Romsdal Sparebank 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 Romsdal Sparebank will offset losses from the drop in Romsdal Sparebank's long position.Stolt Nielsen vs. AF Gruppen ASA | Stolt Nielsen vs. Gjensidige Forsikring ASA | Stolt Nielsen vs. Storebrand ASA | Stolt Nielsen vs. Orkla ASA |
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Check out your portfolio center.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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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