Correlation Between Stolt Nielsen and Xplora Technologies

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

Diversification Opportunities for Stolt Nielsen and Xplora Technologies

-0.91

Correlation Coefficient

Stolt Nielsen  Xplora Technologies

Pay attention - limited upside

The 3 months correlation between Stolt and Xplora is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding Stolt Nielsen Limited and Xplora Technologies As in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xplora Technologies 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 Xplora Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xplora Technologies has no effect on the direction of Stolt Nielsen i.e., Stolt Nielsen and Xplora Technologies go up and down completely randomly.

Pair Corralation between Stolt Nielsen and Xplora Technologies

Assuming the 90 days trading horizon Stolt Nielsen Limited is expected to under-perform the Xplora Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Stolt Nielsen Limited is 1.48 times less risky than Xplora Technologies. The stock trades about -0.2 of its potential returns per unit of risk. The Xplora Technologies As is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  1,730  in Xplora Technologies As on September 22, 2024 and sell it today you would earn a total of  1,320  from holding Xplora Technologies As or generate 76.3% return on investment over 90 days.

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

Stolt Nielsen Limited  vs.  Xplora Technologies As

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.

Xplora Technologies

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Xplora Technologies As are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Xplora Technologies displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Stolt Nielsen and Xplora Technologies

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

The idea behind Stolt Nielsen Limited and Xplora Technologies As 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.