Correlation Between Stolt Nielsen and Odfjell SE

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

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

Diversification Opportunities for Stolt Nielsen and Odfjell SE

0.92

Correlation Coefficient

Stolt Nielsen  Odfjell SE

Almost no diversification

The 3 months correlation between Stolt and Odfjell is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Stolt Nielsen Limited and Odfjell SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Odfjell SE and Stolt Nielsen 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 Stolt Nielsen Limited are associated (or correlated) with Odfjell SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Odfjell SE has no effect on the direction of Stolt Nielsen i.e., Stolt Nielsen and Odfjell SE go up and down completely randomly.

Pair Corralation between Stolt Nielsen and Odfjell SE

Assuming the 90 days trading horizon Stolt Nielsen is expected to generate 1.89 times less return on investment than Odfjell SE. But when comparing it to its historical volatility, Stolt Nielsen Limited is 1.08 times less risky than Odfjell SE. It trades about 0.03 of its potential returns per unit of risk. Odfjell SE is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  6,729  in Odfjell SE on September 19, 2024 and sell it today you would earn a total of  3,631  from holding Odfjell SE or generate 53.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	99.8%
Values	Daily Returns

Stolt Nielsen Limited  vs.  Odfjell SE

Stolt Nielsen Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stolt Nielsen Limited 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 forward 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 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.

Pair Trading with Stolt Nielsen and Odfjell SE

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

The idea behind Stolt Nielsen Limited and Odfjell SE 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.

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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.