Correlation Between Stolt Nielsen and Romerike Sparebank

Can any of the company-specific risk be diversified away by investing in both Stolt Nielsen and Romerike 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 Stolt Nielsen and Romerike Sparebank 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 Romerike Sparebank, you can compare the effects of market volatilities on Stolt Nielsen and Romerike 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 Stolt Nielsen with a short position of Romerike Sparebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stolt Nielsen and Romerike Sparebank.

Diversification Opportunities for Stolt Nielsen and Romerike Sparebank

-0.55

Correlation Coefficient

Stolt Nielsen  Romerike Sparebank

Excellent diversification

The 3 months correlation between Stolt and Romerike is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Stolt Nielsen Limited and Romerike Sparebank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Romerike Sparebank 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 Romerike Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Romerike Sparebank has no effect on the direction of Stolt Nielsen i.e., Stolt Nielsen and Romerike Sparebank go up and down completely randomly.

Pair Corralation between Stolt Nielsen and Romerike Sparebank

Assuming the 90 days trading horizon Stolt Nielsen is expected to generate 13.1 times less return on investment than Romerike Sparebank. In addition to that, Stolt Nielsen is 1.63 times more volatile than Romerike Sparebank. It trades about 0.0 of its total potential returns per unit of risk. Romerike Sparebank is currently generating about 0.07 per unit of volatility. If you would invest  10,874  in Romerike Sparebank on September 25, 2024 and sell it today you would earn a total of  2,226  from holding Romerike Sparebank or generate 20.47% return on investment over 90 days.

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

Stolt Nielsen Limited  vs.  Romerike Sparebank

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 unfluctuating 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.

Romerike Sparebank

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Romerike Sparebank are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Romerike Sparebank may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Stolt Nielsen and Romerike Sparebank

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

The idea behind Stolt Nielsen Limited and Romerike 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.

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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.