Correlation Between Nordic American and DHT Holdings

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

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

Diversification Opportunities for Nordic American and DHT Holdings

0.57

Correlation Coefficient

Nordic American  DHT Holdings

Very weak diversification

The 3 months correlation between Nordic and DHT is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Nordic American Tankers and DHT Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DHT Holdings and Nordic American 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 Nordic American Tankers are associated (or correlated) with DHT Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DHT Holdings has no effect on the direction of Nordic American i.e., Nordic American and DHT Holdings go up and down completely randomly.

Pair Corralation between Nordic American and DHT Holdings

Considering the 90-day investment horizon Nordic American Tankers is expected to generate 1.15 times more return on investment than DHT Holdings. However, Nordic American is 1.15 times more volatile than DHT Holdings. It trades about 0.1 of its potential returns per unit of risk. DHT Holdings is currently generating about 0.06 per unit of risk. If you would invest  249.00  in Nordic American Tankers on May 1, 2025 and sell it today you would earn a total of  30.00  from holding Nordic American Tankers or generate 12.05% return on investment over 90 days.

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

Nordic American Tankers  vs.  DHT Holdings

Nordic American Tankers

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nordic American Tankers are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Nordic American unveiled solid returns over the last few months and may actually be approaching a breakup point.

DHT Holdings

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in DHT Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating technical indicators, DHT Holdings may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Nordic American and DHT Holdings

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

The idea behind Nordic American Tankers and DHT Holdings 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.