Correlation Between Triad Group and Odfjell Drilling

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

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

Diversification Opportunities for Triad Group and Odfjell Drilling

-0.01

Correlation Coefficient

Triad Group  Odfjell Drilling

Good diversification

The 3 months correlation between Triad and Odfjell is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Triad Group PLC and Odfjell Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Odfjell Drilling and Triad Group 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 Triad Group PLC are associated (or correlated) with Odfjell Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Odfjell Drilling has no effect on the direction of Triad Group i.e., Triad Group and Odfjell Drilling go up and down completely randomly.

Pair Corralation between Triad Group and Odfjell Drilling

Assuming the 90 days trading horizon Triad Group PLC is expected to generate 1.18 times more return on investment than Odfjell Drilling. However, Triad Group is 1.18 times more volatile than Odfjell Drilling. It trades about 0.05 of its potential returns per unit of risk. Odfjell Drilling is currently generating about -0.02 per unit of risk. If you would invest  24,891  in Triad Group PLC on September 24, 2024 and sell it today you would earn a total of  3,109  from holding Triad Group PLC or generate 12.49% return on investment over 90 days.

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

Triad Group PLC  vs.  Odfjell Drilling

Triad Group PLC

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Triad Group PLC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Triad Group is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Odfjell Drilling

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Odfjell Drilling has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Odfjell Drilling is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Triad Group and Odfjell Drilling

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

The idea behind Triad Group PLC and Odfjell Drilling 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.