Correlation Between MEDIPAL HOLDINGS and EIDESVIK OFFSHORE
Can any of the company-specific risk be diversified away by investing in both MEDIPAL HOLDINGS and EIDESVIK OFFSHORE 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 MEDIPAL HOLDINGS and EIDESVIK OFFSHORE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MEDIPAL HOLDINGS P and EIDESVIK OFFSHORE NK, you can compare the effects of market volatilities on MEDIPAL HOLDINGS and EIDESVIK OFFSHORE 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 MEDIPAL HOLDINGS with a short position of EIDESVIK OFFSHORE. Check out your portfolio center. Please also check ongoing floating volatility patterns of MEDIPAL HOLDINGS and EIDESVIK OFFSHORE.
Diversification Opportunities for MEDIPAL HOLDINGS and EIDESVIK OFFSHORE
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MEDIPAL and EIDESVIK is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding MEDIPAL HOLDINGS P and EIDESVIK OFFSHORE NK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EIDESVIK OFFSHORE and MEDIPAL HOLDINGS 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 MEDIPAL HOLDINGS P are associated (or correlated) with EIDESVIK OFFSHORE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EIDESVIK OFFSHORE has no effect on the direction of MEDIPAL HOLDINGS i.e., MEDIPAL HOLDINGS and EIDESVIK OFFSHORE go up and down completely randomly.
Pair Corralation between MEDIPAL HOLDINGS and EIDESVIK OFFSHORE
Assuming the 90 days horizon MEDIPAL HOLDINGS is expected to generate 2.82 times less return on investment than EIDESVIK OFFSHORE. But when comparing it to its historical volatility, MEDIPAL HOLDINGS P is 2.22 times less risky than EIDESVIK OFFSHORE. It trades about 0.04 of its potential returns per unit of risk. EIDESVIK OFFSHORE NK is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 62.00 in EIDESVIK OFFSHORE NK on September 4, 2024 and sell it today you would earn a total of 48.00 from holding EIDESVIK OFFSHORE NK or generate 77.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MEDIPAL HOLDINGS P vs. EIDESVIK OFFSHORE NK
Performance |
| Timeline |
| MEDIPAL HOLDINGS P |
| EIDESVIK OFFSHORE |
MEDIPAL HOLDINGS and EIDESVIK OFFSHORE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MEDIPAL HOLDINGS and EIDESVIK OFFSHORE
The main advantage of trading using opposite MEDIPAL HOLDINGS and EIDESVIK OFFSHORE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MEDIPAL HOLDINGS position performs unexpectedly, EIDESVIK OFFSHORE 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 EIDESVIK OFFSHORE will offset losses from the drop in EIDESVIK OFFSHORE's long position.| MEDIPAL HOLDINGS vs. EIDESVIK OFFSHORE NK | MEDIPAL HOLDINGS vs. Air New Zealand | MEDIPAL HOLDINGS vs. ALTAIR RES INC | MEDIPAL HOLDINGS vs. HF SINCLAIR P |
| EIDESVIK OFFSHORE vs. Apple Inc | EIDESVIK OFFSHORE vs. Apple Inc | EIDESVIK OFFSHORE vs. Apple Inc | EIDESVIK OFFSHORE vs. Apple Inc |
Check out your portfolio center.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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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