Correlation Between Goodtech and Stolt Nielsen

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

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

Diversification Opportunities for Goodtech and Stolt Nielsen

0.59

Correlation Coefficient

Goodtech  Stolt Nielsen

Very weak diversification

The 3 months correlation between Goodtech and Stolt is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Goodtech and Stolt Nielsen Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stolt Nielsen Limited and Goodtech 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 Goodtech are associated (or correlated) with Stolt Nielsen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stolt Nielsen Limited has no effect on the direction of Goodtech i.e., Goodtech and Stolt Nielsen go up and down completely randomly.

Pair Corralation between Goodtech and Stolt Nielsen

Assuming the 90 days trading horizon Goodtech is expected to generate 2.3 times less return on investment than Stolt Nielsen. But when comparing it to its historical volatility, Goodtech is 1.38 times less risky than Stolt Nielsen. It trades about 0.13 of its potential returns per unit of risk. Stolt Nielsen Limited is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  22,750  in Stolt Nielsen Limited on April 24, 2025 and sell it today you would earn a total of  7,750  from holding Stolt Nielsen Limited or generate 34.07% return on investment over 90 days.

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

Goodtech  vs.  Stolt Nielsen Limited

Goodtech

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Goodtech are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental indicators, Goodtech disclosed solid returns over the last few months and may actually be approaching a breakup point.

Stolt Nielsen Limited

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Stolt Nielsen Limited are ranked lower than 17 (%) 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.

Pair Trading with Goodtech and Stolt Nielsen

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

The idea behind Goodtech and Stolt Nielsen Limited 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.