Correlation Between Odfjell SE and Odfjell B

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

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

Diversification Opportunities for Odfjell SE and Odfjell B

0.99

Correlation Coefficient

Odfjell SE  Odfjell B

No risk reduction

The 3 months correlation between Odfjell and Odfjell is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Odfjell SE and Odfjell B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Odfjell B and Odfjell SE 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 Odfjell SE are associated (or correlated) with Odfjell B. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Odfjell B has no effect on the direction of Odfjell SE i.e., Odfjell SE and Odfjell B go up and down completely randomly.

Pair Corralation between Odfjell SE and Odfjell B

Assuming the 90 days trading horizon Odfjell SE is expected to under-perform the Odfjell B. But the stock apears to be less risky and, when comparing its historical volatility, Odfjell SE is 1.04 times less risky than Odfjell B. The stock trades about -0.25 of its potential returns per unit of risk. The Odfjell B is currently generating about -0.2 of returns per unit of risk over similar time horizon. If you would invest  14,050  in Odfjell B on September 19, 2024 and sell it today you would lose (3,850) from holding Odfjell B or give up 27.4% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.46%
Values	Daily Returns

Odfjell SE  vs.  Odfjell B

Odfjell SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Odfjell SE 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 technical and fundamental indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Odfjell B

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Odfjell B 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 essential indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Odfjell SE and Odfjell B

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

The idea behind Odfjell SE and Odfjell B 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 Global Correlations module to find global opportunities by holding instruments from different markets.