Correlation Between Yara International and Odfjell SE

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Can any of the company-specific risk be diversified away by investing in both Yara International 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 Yara International and Odfjell SE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yara International ASA and Odfjell SE, you can compare the effects of market volatilities on Yara International 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 Yara International with a short position of Odfjell SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yara International and Odfjell SE.

Diversification Opportunities for Yara International and Odfjell SE

YaraOdfjellDiversified AwayYaraOdfjellDiversified Away100%
0.78
  Correlation Coefficient

Poor diversification

The 3 months correlation between Yara and Odfjell is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Yara International ASA and Odfjell SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Odfjell SE and Yara International 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 Yara International ASA 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 Yara International i.e., Yara International and Odfjell SE go up and down completely randomly.

Pair Corralation between Yara International and Odfjell SE

Assuming the 90 days trading horizon Yara International ASA is expected to generate 0.52 times more return on investment than Odfjell SE. However, Yara International ASA is 1.92 times less risky than Odfjell SE. It trades about -0.11 of its potential returns per unit of risk. Odfjell SE is currently generating about -0.15 per unit of risk. If you would invest  32,760  in Yara International ASA on September 26, 2024 and sell it today you would lose (2,860) from holding Yara International ASA or give up 8.73% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Yara International ASA  vs.  Odfjell SE

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -25-20-15-10-50510
JavaScript chart by amCharts 3.21.15YAR ODF
       Timeline  
Yara International ASA 

Risk-Adjusted Performance

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Over the last 90 days Yara International ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec300310320330340350
Odfjell SE 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec110120130140150

Yara International and Odfjell SE Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-2.04-1.55-1.06-0.57-0.08450.360.851.341.832.32 0.050.100.150.200.25
JavaScript chart by amCharts 3.21.15YAR ODF
       Returns  

Pair Trading with Yara International and Odfjell SE

The main advantage of trading using opposite Yara International and Odfjell SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yara International 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 Yara International ASA 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.
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.

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