Correlation Between EIDESVIK OFFSHORE and MEDIPAL HOLDINGS
Can any of the company-specific risk be diversified away by investing in both EIDESVIK OFFSHORE and MEDIPAL HOLDINGS 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 EIDESVIK OFFSHORE and MEDIPAL HOLDINGS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EIDESVIK OFFSHORE NK and MEDIPAL HOLDINGS P, you can compare the effects of market volatilities on EIDESVIK OFFSHORE and MEDIPAL HOLDINGS 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 EIDESVIK OFFSHORE with a short position of MEDIPAL HOLDINGS. Check out your portfolio center. Please also check ongoing floating volatility patterns of EIDESVIK OFFSHORE and MEDIPAL HOLDINGS.
Diversification Opportunities for EIDESVIK OFFSHORE and MEDIPAL HOLDINGS
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between EIDESVIK and MEDIPAL is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding EIDESVIK OFFSHORE NK and MEDIPAL HOLDINGS P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MEDIPAL HOLDINGS P and EIDESVIK OFFSHORE 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 EIDESVIK OFFSHORE NK are associated (or correlated) with MEDIPAL HOLDINGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MEDIPAL HOLDINGS P has no effect on the direction of EIDESVIK OFFSHORE i.e., EIDESVIK OFFSHORE and MEDIPAL HOLDINGS go up and down completely randomly.
Pair Corralation between EIDESVIK OFFSHORE and MEDIPAL HOLDINGS
Assuming the 90 days horizon EIDESVIK OFFSHORE NK is expected to generate 1.76 times more return on investment than MEDIPAL HOLDINGS. However, EIDESVIK OFFSHORE is 1.76 times more volatile than MEDIPAL HOLDINGS P. It trades about 0.04 of its potential returns per unit of risk. MEDIPAL HOLDINGS P is currently generating about 0.02 per unit of risk. If you would invest 93.00 in EIDESVIK OFFSHORE NK on September 4, 2024 and sell it today you would earn a total of 17.00 from holding EIDESVIK OFFSHORE NK or generate 18.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EIDESVIK OFFSHORE NK vs. MEDIPAL HOLDINGS P
Performance |
| Timeline |
| EIDESVIK OFFSHORE |
| MEDIPAL HOLDINGS P |
EIDESVIK OFFSHORE and MEDIPAL HOLDINGS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EIDESVIK OFFSHORE and MEDIPAL HOLDINGS
The main advantage of trading using opposite EIDESVIK OFFSHORE and MEDIPAL HOLDINGS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EIDESVIK OFFSHORE position performs unexpectedly, MEDIPAL HOLDINGS 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 MEDIPAL HOLDINGS will offset losses from the drop in MEDIPAL HOLDINGS's long position.| EIDESVIK OFFSHORE vs. Apple Inc | EIDESVIK OFFSHORE vs. Apple Inc | EIDESVIK OFFSHORE vs. Apple Inc | EIDESVIK OFFSHORE vs. Apple Inc |
| MEDIPAL HOLDINGS vs. EIDESVIK OFFSHORE NK | MEDIPAL HOLDINGS vs. Air New Zealand | MEDIPAL HOLDINGS vs. ALTAIR RES INC | MEDIPAL HOLDINGS vs. HF SINCLAIR P |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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