Correlation Between Aluminumof China and Eidesvik Offshore
Can any of the company-specific risk be diversified away by investing in both Aluminumof China 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 Aluminumof China and Eidesvik Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aluminum of and Eidesvik Offshore ASA, you can compare the effects of market volatilities on Aluminumof China 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 Aluminumof China with a short position of Eidesvik Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aluminumof China and Eidesvik Offshore.
Diversification Opportunities for Aluminumof China and Eidesvik Offshore
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Aluminumof and Eidesvik is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Aluminum of 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 Aluminumof China 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 Aluminum of 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 Aluminumof China i.e., Aluminumof China and Eidesvik Offshore go up and down completely randomly.
Pair Corralation between Aluminumof China and Eidesvik Offshore
Assuming the 90 days horizon Aluminum of is expected to generate 1.12 times more return on investment than Eidesvik Offshore. However, Aluminumof China is 1.12 times more volatile than Eidesvik Offshore ASA. It trades about 0.29 of its potential returns per unit of risk. Eidesvik Offshore ASA is currently generating about 0.07 per unit of risk. If you would invest 53.00 in Aluminum of on October 22, 2024 and sell it today you would earn a total of 8.00 from holding Aluminum of or generate 15.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aluminum of vs. Eidesvik Offshore ASA
Performance |
| Timeline |
| Aluminumof China |
| Eidesvik Offshore ASA |
Aluminumof China and Eidesvik Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aluminumof China and Eidesvik Offshore
The main advantage of trading using opposite Aluminumof China and Eidesvik Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aluminumof China 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.| Aluminumof China vs. INTERSHOP Communications Aktiengesellschaft | Aluminumof China vs. Luckin Coffee | Aluminumof China vs. Darden Restaurants | Aluminumof China vs. Highlight Communications AG |
| Eidesvik Offshore vs. MAG SILVER | Eidesvik Offshore vs. Zijin Mining Group | Eidesvik Offshore vs. GALENA MINING LTD | Eidesvik Offshore vs. SILICON LABORATOR |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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