Correlation Between Ocean Sun and Polight ASA
Can any of the company-specific risk be diversified away by investing in both Ocean Sun and Polight ASA 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 Ocean Sun and Polight ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ocean Sun As and Polight ASA, you can compare the effects of market volatilities on Ocean Sun and Polight ASA 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 Ocean Sun with a short position of Polight ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ocean Sun and Polight ASA.
Diversification Opportunities for Ocean Sun and Polight ASA
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Ocean and Polight is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Ocean Sun As and Polight ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polight ASA and Ocean Sun 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 Ocean Sun As are associated (or correlated) with Polight ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polight ASA has no effect on the direction of Ocean Sun i.e., Ocean Sun and Polight ASA go up and down completely randomly.
Pair Corralation between Ocean Sun and Polight ASA
Assuming the 90 days trading horizon Ocean Sun As is expected to under-perform the Polight ASA. But the stock apears to be less risky and, when comparing its historical volatility, Ocean Sun As is 1.17 times less risky than Polight ASA. The stock trades about -0.03 of its potential returns per unit of risk. The Polight ASA is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 1,888 in Polight ASA on September 6, 2024 and sell it today you would lose (1,402) from holding Polight ASA or give up 74.26% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Ocean Sun As vs. Polight ASA
Performance |
Timeline |
Ocean Sun As |
Polight ASA |
Ocean Sun and Polight ASA Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ocean Sun and Polight ASA
The main advantage of trading using opposite Ocean Sun and Polight ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ocean Sun position performs unexpectedly, Polight ASA 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 Polight ASA will offset losses from the drop in Polight ASA's long position.Ocean Sun vs. Norwegian Air Shuttle | Ocean Sun vs. Polaris Media | Ocean Sun vs. Dolphin Drilling AS | Ocean Sun vs. Odfjell Technology |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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