Correlation Between EIDESVIK OFFSHORE and REINET INVESTMENTS
Can any of the company-specific risk be diversified away by investing in both EIDESVIK OFFSHORE and REINET INVESTMENTS 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 REINET INVESTMENTS 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 REINET INVESTMENTS SCA, you can compare the effects of market volatilities on EIDESVIK OFFSHORE and REINET INVESTMENTS 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 REINET INVESTMENTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of EIDESVIK OFFSHORE and REINET INVESTMENTS.
Diversification Opportunities for EIDESVIK OFFSHORE and REINET INVESTMENTS
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between EIDESVIK and REINET is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding EIDESVIK OFFSHORE NK and REINET INVESTMENTS SCA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REINET INVESTMENTS SCA 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 REINET INVESTMENTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REINET INVESTMENTS SCA has no effect on the direction of EIDESVIK OFFSHORE i.e., EIDESVIK OFFSHORE and REINET INVESTMENTS go up and down completely randomly.
Pair Corralation between EIDESVIK OFFSHORE and REINET INVESTMENTS
Assuming the 90 days horizon EIDESVIK OFFSHORE NK is expected to under-perform the REINET INVESTMENTS. But the stock apears to be less risky and, when comparing its historical volatility, EIDESVIK OFFSHORE NK is 1.13 times less risky than REINET INVESTMENTS. The stock trades about -0.04 of its potential returns per unit of risk. The REINET INVESTMENTS SCA is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2,400 in REINET INVESTMENTS SCA on November 28, 2024 and sell it today you would earn a total of 20.00 from holding REINET INVESTMENTS SCA or generate 0.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EIDESVIK OFFSHORE NK vs. REINET INVESTMENTS SCA
Performance |
| Timeline |
| EIDESVIK OFFSHORE |
| REINET INVESTMENTS SCA |
EIDESVIK OFFSHORE and REINET INVESTMENTS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EIDESVIK OFFSHORE and REINET INVESTMENTS
The main advantage of trading using opposite EIDESVIK OFFSHORE and REINET INVESTMENTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EIDESVIK OFFSHORE position performs unexpectedly, REINET INVESTMENTS 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 REINET INVESTMENTS will offset losses from the drop in REINET INVESTMENTS's long position.| EIDESVIK OFFSHORE vs. Jupiter Fund Management | EIDESVIK OFFSHORE vs. CeoTronics AG | EIDESVIK OFFSHORE vs. Perdoceo Education | EIDESVIK OFFSHORE vs. CHINA EDUCATION GROUP |
| REINET INVESTMENTS vs. SCANSOURCE | REINET INVESTMENTS vs. ePlay Digital | REINET INVESTMENTS vs. Playa Hotels Resorts | REINET INVESTMENTS vs. COLUMBIA SPORTSWEAR |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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