Correlation Between Wilh Wilhelmsen and Odfjell B
Can any of the company-specific risk be diversified away by investing in both Wilh Wilhelmsen and Odfjell B 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 Wilh Wilhelmsen and Odfjell B into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wilh Wilhelmsen Holding and Odfjell B, you can compare the effects of market volatilities on Wilh Wilhelmsen and Odfjell B 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 Wilh Wilhelmsen with a short position of Odfjell B. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wilh Wilhelmsen and Odfjell B.
Diversification Opportunities for Wilh Wilhelmsen and Odfjell B
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Wilh and Odfjell is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Wilh Wilhelmsen Holding and Odfjell B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Odfjell B and Wilh Wilhelmsen 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 Wilh Wilhelmsen Holding are associated (or correlated) with Odfjell B. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Odfjell B has no effect on the direction of Wilh Wilhelmsen i.e., Wilh Wilhelmsen and Odfjell B go up and down completely randomly.
Pair Corralation between Wilh Wilhelmsen and Odfjell B
Assuming the 90 days trading horizon Wilh Wilhelmsen Holding is expected to generate 0.7 times more return on investment than Odfjell B. However, Wilh Wilhelmsen Holding is 1.44 times less risky than Odfjell B. It trades about -0.09 of its potential returns per unit of risk. Odfjell B is currently generating about -0.2 per unit of risk. If you would invest 43,207 in Wilh Wilhelmsen Holding on September 19, 2024 and sell it today you would lose (4,257) from holding Wilh Wilhelmsen Holding or give up 9.85% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Wilh Wilhelmsen Holding vs. Odfjell B
Performance |
Timeline |
Wilh Wilhelmsen Holding |
Odfjell B |
Wilh Wilhelmsen and Odfjell B Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Wilh Wilhelmsen and Odfjell B
The main advantage of trading using opposite Wilh Wilhelmsen and Odfjell B positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wilh Wilhelmsen position performs unexpectedly, Odfjell B 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 B will offset losses from the drop in Odfjell B's long position.Wilh Wilhelmsen vs. Eidesvik Offshore ASA | Wilh Wilhelmsen vs. Kitron ASA | Wilh Wilhelmsen vs. Havila Shipping ASA | Wilh Wilhelmsen vs. Arendals Fossekompani ASA |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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