Correlation Between Odfjell B and Grong Sparebank

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

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

Diversification Opportunities for Odfjell B and Grong Sparebank

-0.68

Correlation Coefficient

Odfjell B  Grong Sparebank

Excellent diversification

The 3 months correlation between Odfjell and Grong is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Odfjell B and Grong Sparebank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grong Sparebank and Odfjell B 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 B are associated (or correlated) with Grong Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grong Sparebank has no effect on the direction of Odfjell B i.e., Odfjell B and Grong Sparebank go up and down completely randomly.

Pair Corralation between Odfjell B and Grong Sparebank

Assuming the 90 days trading horizon Odfjell B is expected to under-perform the Grong Sparebank. In addition to that, Odfjell B is 2.06 times more volatile than Grong Sparebank. It trades about -0.12 of its total potential returns per unit of risk. Grong Sparebank is currently generating about 0.02 per unit of volatility. If you would invest  14,790  in Grong Sparebank on September 26, 2024 and sell it today you would earn a total of  210.00  from holding Grong Sparebank or generate 1.42% return on investment over 90 days.

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

Odfjell B  vs.  Grong Sparebank

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 unfluctuating 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.

Grong Sparebank

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Grong Sparebank are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Grong Sparebank is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Odfjell B and Grong Sparebank

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

The idea behind Odfjell B and Grong Sparebank 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.