Correlation Between Orient Overseas and Nordic American

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

By analyzing existing cross correlation between Orient Overseas International and Nordic American Tankers, you can compare the effects of market volatilities on Orient Overseas and Nordic American 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 Orient Overseas with a short position of Nordic American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orient Overseas and Nordic American.

Diversification Opportunities for Orient Overseas and Nordic American

0.26

Correlation Coefficient

Orient Overseas  Nordic American

Modest diversification

The 3 months correlation between Orient and Nordic is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Orient Overseas International and Nordic American Tankers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordic American Tankers and Orient Overseas 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 Orient Overseas International are associated (or correlated) with Nordic American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordic American Tankers has no effect on the direction of Orient Overseas i.e., Orient Overseas and Nordic American go up and down completely randomly.

Pair Corralation between Orient Overseas and Nordic American

Assuming the 90 days horizon Orient Overseas International is expected to under-perform the Nordic American. In addition to that, Orient Overseas is 2.59 times more volatile than Nordic American Tankers. It trades about -0.09 of its total potential returns per unit of risk. Nordic American Tankers is currently generating about -0.05 per unit of volatility. If you would invest  390.00  in Nordic American Tankers on January 24, 2024 and sell it today you would lose (14.00) from holding Nordic American Tankers or give up 3.59% of portfolio value over 90 days.

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

Orient Overseas International  vs.  Nordic American Tankers

Orient Overseas Inte

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Orient Overseas International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Nordic American Tankers

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nordic American Tankers has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in May 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Orient Overseas and Nordic American

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

The idea behind Orient Overseas International and Nordic American Tankers 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 Global Correlations module to find global opportunities by holding instruments from different markets.