Correlation Between Oceanpal and SFL

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

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

Diversification Opportunities for Oceanpal and SFL

0.06

Correlation Coefficient

Oceanpal  SFL

Significant diversification

The 3 months correlation between Oceanpal and SFL is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Oceanpal and SFL Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SFL Corporation and Oceanpal 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 Oceanpal are associated (or correlated) with SFL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SFL Corporation has no effect on the direction of Oceanpal i.e., Oceanpal and SFL go up and down completely randomly.

Pair Corralation between Oceanpal and SFL

Allowing for the 90-day total investment horizon Oceanpal is expected to under-perform the SFL. In addition to that, Oceanpal is 2.71 times more volatile than SFL Corporation. It trades about -0.23 of its total potential returns per unit of risk. SFL Corporation is currently generating about -0.02 per unit of volatility. If you would invest  1,331  in SFL Corporation on January 29, 2024 and sell it today you would lose (7.00) from holding SFL Corporation or give up 0.53% of portfolio value over 90 days.

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

Oceanpal  vs.  SFL Corp.

Oceanpal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oceanpal has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Oceanpal is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

SFL Corporation

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SFL Corporation are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady technical and fundamental indicators, SFL may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Oceanpal and SFL

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

The idea behind Oceanpal and SFL Corporation 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.