Correlation Between Subsea 7 and Havila Shipping
Can any of the company-specific risk be diversified away by investing in both Subsea 7 and Havila Shipping 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 Subsea 7 and Havila Shipping into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Subsea 7 SA and Havila Shipping ASA, you can compare the effects of market volatilities on Subsea 7 and Havila Shipping 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 Subsea 7 with a short position of Havila Shipping. Check out your portfolio center. Please also check ongoing floating volatility patterns of Subsea 7 and Havila Shipping.
Diversification Opportunities for Subsea 7 and Havila Shipping
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Subsea and Havila is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Subsea 7 SA and Havila Shipping ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Havila Shipping ASA and Subsea 7 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 Subsea 7 SA are associated (or correlated) with Havila Shipping. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Havila Shipping ASA has no effect on the direction of Subsea 7 i.e., Subsea 7 and Havila Shipping go up and down completely randomly.
Pair Corralation between Subsea 7 and Havila Shipping
Assuming the 90 days trading horizon Subsea 7 SA is expected to generate 0.56 times more return on investment than Havila Shipping. However, Subsea 7 SA is 1.78 times less risky than Havila Shipping. It trades about -0.09 of its potential returns per unit of risk. Havila Shipping ASA is currently generating about -0.06 per unit of risk. If you would invest 18,000 in Subsea 7 SA on September 10, 2024 and sell it today you would lose (690.00) from holding Subsea 7 SA or give up 3.83% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Subsea 7 SA vs. Havila Shipping ASA
Performance |
Timeline |
Subsea 7 SA |
Havila Shipping ASA |
Subsea 7 and Havila Shipping Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Subsea 7 and Havila Shipping
The main advantage of trading using opposite Subsea 7 and Havila Shipping positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Subsea 7 position performs unexpectedly, Havila Shipping 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 Havila Shipping will offset losses from the drop in Havila Shipping's long position.Subsea 7 vs. TGS NOPEC Geophysical | Subsea 7 vs. Aker Solutions ASA | Subsea 7 vs. Storebrand ASA | Subsea 7 vs. Dno 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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