Correlation Between Nordic American and Kirby

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

By analyzing existing cross correlation between Nordic American Tankers and Kirby, you can compare the effects of market volatilities on Nordic American and Kirby 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 Nordic American with a short position of Kirby. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordic American and Kirby.

Diversification Opportunities for Nordic American and Kirby

-0.09

Correlation Coefficient

Nordic American  Kirby

Good diversification

The 3 months correlation between Nordic and Kirby is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Nordic American Tankers and Kirby in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kirby and Nordic American 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 Nordic American Tankers are associated (or correlated) with Kirby. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kirby has no effect on the direction of Nordic American i.e., Nordic American and Kirby go up and down completely randomly.

Pair Corralation between Nordic American and Kirby

Considering the 90-day investment horizon Nordic American Tankers is expected to under-perform the Kirby. In addition to that, Nordic American is 1.08 times more volatile than Kirby. It trades about -0.23 of its total potential returns per unit of risk. Kirby is currently generating about -0.01 per unit of volatility. If you would invest  12,032  in Kirby on September 14, 2024 and sell it today you would lose (330.00) from holding Kirby or give up 2.74% of portfolio value over 90 days.

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

Nordic American Tankers  vs.  Kirby

Nordic American Tankers

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nordic American Tankers has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Kirby

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kirby has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Kirby is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Nordic American and Kirby

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

The idea behind Nordic American Tankers and Kirby 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.