Correlation Between Euronav NV and Ardmore Shpng

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

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

Diversification Opportunities for Euronav NV and Ardmore Shpng

0.9

Correlation Coefficient

Euronav NV  Ardmore Shpng

Almost no diversification

The 3 months correlation between Euronav and Ardmore is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Euronav NV and Ardmore Shpng in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ardmore Shpng and Euronav NV 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 Euronav NV are associated (or correlated) with Ardmore Shpng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ardmore Shpng has no effect on the direction of Euronav NV i.e., Euronav NV and Ardmore Shpng go up and down completely randomly.

Pair Corralation between Euronav NV and Ardmore Shpng

Given the investment horizon of 90 days Euronav NV is expected to generate 1.49 times less return on investment than Ardmore Shpng. But when comparing it to its historical volatility, Euronav NV is 1.05 times less risky than Ardmore Shpng. It trades about 0.08 of its potential returns per unit of risk. Ardmore Shpng is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  614.00  in Ardmore Shpng on March 2, 2024 and sell it today you would earn a total of  1,686  from holding Ardmore Shpng or generate 274.59% return on investment over 90 days.

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

Euronav NV  vs.  Ardmore Shpng

Euronav NV

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Euronav NV are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Euronav NV displayed solid returns over the last few months and may actually be approaching a breakup point.

Ardmore Shpng

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ardmore Shpng are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Ardmore Shpng exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Euronav NV and Ardmore Shpng

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

The idea behind Euronav NV and Ardmore Shpng 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.