Correlation Between Torm PLC and Flutter Entertainment

Can any of the company-specific risk be diversified away by investing in both Torm PLC and Flutter Entertainment 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 Torm PLC and Flutter Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Torm PLC Class and Flutter Entertainment plc, you can compare the effects of market volatilities on Torm PLC and Flutter Entertainment 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 Torm PLC with a short position of Flutter Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Torm PLC and Flutter Entertainment.

Diversification Opportunities for Torm PLC and Flutter Entertainment

0.69

Correlation Coefficient

Torm PLC  Flutter Entertainment

Poor diversification

The 3 months correlation between Torm and Flutter is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Torm PLC Class and Flutter Entertainment plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flutter Entertainment plc and Torm PLC 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 Torm PLC Class are associated (or correlated) with Flutter Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flutter Entertainment plc has no effect on the direction of Torm PLC i.e., Torm PLC and Flutter Entertainment go up and down completely randomly.

Pair Corralation between Torm PLC and Flutter Entertainment

Given the investment horizon of 90 days Torm PLC is expected to generate 1.08 times less return on investment than Flutter Entertainment. In addition to that, Torm PLC is 1.24 times more volatile than Flutter Entertainment plc. It trades about 0.1 of its total potential returns per unit of risk. Flutter Entertainment plc is currently generating about 0.13 per unit of volatility. If you would invest  24,184  in Flutter Entertainment plc on May 13, 2025 and sell it today you would earn a total of  3,875  from holding Flutter Entertainment plc or generate 16.02% return on investment over 90 days.

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

Torm PLC Class  vs.  Flutter Entertainment plc

Torm PLC Class

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Torm PLC Class are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak primary indicators, Torm PLC exhibited solid returns over the last few months and may actually be approaching a breakup point.

Flutter Entertainment plc

Risk-Adjusted Performance

Fair

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

Pair Trading with Torm PLC and Flutter Entertainment

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

The idea behind Torm PLC Class and Flutter Entertainment plc 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.