Correlation Between DHT Holdings and Euronav NV

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

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

Diversification Opportunities for DHT Holdings and Euronav NV

-0.5

Correlation Coefficient

DHT Holdings  Euronav NV

Very good diversification

The 3 months correlation between DHT and Euronav is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding DHT Holdings and Euronav NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Euronav NV and DHT Holdings 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 DHT Holdings are associated (or correlated) with Euronav NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Euronav NV has no effect on the direction of DHT Holdings i.e., DHT Holdings and Euronav NV go up and down completely randomly.

Pair Corralation between DHT Holdings and Euronav NV

Considering the 90-day investment horizon DHT Holdings is expected to generate 0.94 times more return on investment than Euronav NV. However, DHT Holdings is 1.07 times less risky than Euronav NV. It trades about 0.08 of its potential returns per unit of risk. Euronav NV is currently generating about 0.05 per unit of risk. If you would invest  642.00  in DHT Holdings on February 3, 2024 and sell it today you would earn a total of  535.00  from holding DHT Holdings or generate 83.33% return on investment over 90 days.

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

DHT Holdings  vs.  Euronav NV

DHT Holdings

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DHT Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical indicators, DHT Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.

Euronav NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Euronav NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Euronav NV is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with DHT Holdings and Euronav NV

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

The idea behind DHT Holdings and Euronav NV 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.