Correlation Between River Tech and Stolt Nielsen

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

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

Diversification Opportunities for River Tech and Stolt Nielsen

0.5

Correlation Coefficient

River Tech  Stolt Nielsen

Very weak diversification

The 3 months correlation between River and Stolt is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding River Tech plc 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 River Tech 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 River Tech plc 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 River Tech i.e., River Tech and Stolt Nielsen go up and down completely randomly.

Pair Corralation between River Tech and Stolt Nielsen

Assuming the 90 days trading horizon River Tech is expected to generate 3.57 times less return on investment than Stolt Nielsen. But when comparing it to its historical volatility, River Tech plc is 1.0 times less risky than Stolt Nielsen. It trades about 0.05 of its potential returns per unit of risk. Stolt Nielsen Limited is currently generating about 0.19 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  6,450  from holding Stolt Nielsen Limited or generate 28.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

River Tech plc  vs.  Stolt Nielsen Limited

River Tech plc

Risk-Adjusted Performance

Insignificant

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

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 15 (%) 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 River Tech and Stolt Nielsen

The main advantage of trading using opposite River Tech and Stolt Nielsen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if River Tech 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 River Tech plc 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.