Correlation Between Stolt Nielsen and Techstep ASA

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

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

Diversification Opportunities for Stolt Nielsen and Techstep ASA

0.86

Correlation Coefficient

Stolt Nielsen  Techstep ASA

Very poor diversification

The 3 months correlation between Stolt and Techstep is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Stolt Nielsen Limited and Techstep ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Techstep ASA and Stolt Nielsen 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 Stolt Nielsen Limited are associated (or correlated) with Techstep ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Techstep ASA has no effect on the direction of Stolt Nielsen i.e., Stolt Nielsen and Techstep ASA go up and down completely randomly.

Pair Corralation between Stolt Nielsen and Techstep ASA

Assuming the 90 days trading horizon Stolt Nielsen Limited is expected to generate 0.88 times more return on investment than Techstep ASA. However, Stolt Nielsen Limited is 1.14 times less risky than Techstep ASA. It trades about 0.17 of its potential returns per unit of risk. Techstep ASA is currently generating about 0.14 per unit of risk. If you would invest  24,400  in Stolt Nielsen Limited on May 2, 2025 and sell it today you would earn a total of  6,250  from holding Stolt Nielsen Limited or generate 25.61% return on investment over 90 days.

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

Stolt Nielsen Limited  vs.  Techstep ASA

Stolt Nielsen Limited

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Stolt Nielsen Limited are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward indicators, Stolt Nielsen disclosed solid returns over the last few months and may actually be approaching a breakup point.

Techstep ASA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Techstep ASA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating essential indicators, Techstep ASA disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Stolt Nielsen and Techstep ASA

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

The idea behind Stolt Nielsen Limited and Techstep ASA 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.