Correlation Between Gamma Communications and Eidesvik Offshore
Can any of the company-specific risk be diversified away by investing in both Gamma Communications 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 Gamma Communications and Eidesvik Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gamma Communications plc and Eidesvik Offshore ASA, you can compare the effects of market volatilities on Gamma Communications 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 Gamma Communications with a short position of Eidesvik Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gamma Communications and Eidesvik Offshore.
Diversification Opportunities for Gamma Communications and Eidesvik Offshore
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Gamma and Eidesvik is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Gamma Communications plc and Eidesvik Offshore ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eidesvik Offshore ASA and Gamma Communications 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 Gamma Communications plc 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 ASA has no effect on the direction of Gamma Communications i.e., Gamma Communications and Eidesvik Offshore go up and down completely randomly.
Pair Corralation between Gamma Communications and Eidesvik Offshore
Assuming the 90 days horizon Gamma Communications is expected to generate 1.12 times less return on investment than Eidesvik Offshore. But when comparing it to its historical volatility, Gamma Communications plc is 1.33 times less risky than Eidesvik Offshore. It trades about 0.06 of its potential returns per unit of risk. Eidesvik Offshore ASA is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 65.00 in Eidesvik Offshore ASA on September 3, 2024 and sell it today you would earn a total of 44.00 from holding Eidesvik Offshore ASA or generate 67.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gamma Communications plc vs. Eidesvik Offshore ASA
Performance |
| Timeline |
| Gamma Communications plc |
| Eidesvik Offshore ASA |
Gamma Communications and Eidesvik Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gamma Communications and Eidesvik Offshore
The main advantage of trading using opposite Gamma Communications and Eidesvik Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gamma Communications 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.| Gamma Communications vs. Hemisphere Energy Corp | Gamma Communications vs. NetSol Technologies | Gamma Communications vs. LG Display Co | Gamma Communications vs. Citic Telecom International |
| Eidesvik Offshore vs. SCANDMEDICAL SOLDK 040 | Eidesvik Offshore vs. MEDICAL FACILITIES NEW | Eidesvik Offshore vs. Uber Technologies | Eidesvik Offshore vs. PKSHA TECHNOLOGY 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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