Correlation Between EIDESVIK OFFSHORE and STORE ELECTRONIC
Can any of the company-specific risk be diversified away by investing in both EIDESVIK OFFSHORE and STORE ELECTRONIC 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 STORE ELECTRONIC 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 STORE ELECTRONIC, you can compare the effects of market volatilities on EIDESVIK OFFSHORE and STORE ELECTRONIC 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 STORE ELECTRONIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of EIDESVIK OFFSHORE and STORE ELECTRONIC.
Diversification Opportunities for EIDESVIK OFFSHORE and STORE ELECTRONIC
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between EIDESVIK and STORE is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding EIDESVIK OFFSHORE NK and STORE ELECTRONIC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STORE ELECTRONIC 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 STORE ELECTRONIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STORE ELECTRONIC has no effect on the direction of EIDESVIK OFFSHORE i.e., EIDESVIK OFFSHORE and STORE ELECTRONIC go up and down completely randomly.
Pair Corralation between EIDESVIK OFFSHORE and STORE ELECTRONIC
Assuming the 90 days horizon EIDESVIK OFFSHORE is expected to generate 4.05 times less return on investment than STORE ELECTRONIC. But when comparing it to its historical volatility, EIDESVIK OFFSHORE NK is 2.16 times less risky than STORE ELECTRONIC. It trades about 0.14 of its potential returns per unit of risk. STORE ELECTRONIC is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 13,460 in STORE ELECTRONIC on October 18, 2024 and sell it today you would earn a total of 2,620 from holding STORE ELECTRONIC or generate 19.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EIDESVIK OFFSHORE NK vs. STORE ELECTRONIC
Performance |
| Timeline |
| EIDESVIK OFFSHORE |
| STORE ELECTRONIC |
EIDESVIK OFFSHORE and STORE ELECTRONIC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EIDESVIK OFFSHORE and STORE ELECTRONIC
The main advantage of trading using opposite EIDESVIK OFFSHORE and STORE ELECTRONIC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EIDESVIK OFFSHORE position performs unexpectedly, STORE ELECTRONIC 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 STORE ELECTRONIC will offset losses from the drop in STORE ELECTRONIC's long position.| EIDESVIK OFFSHORE vs. UNIVMUSIC GRPADR050 | EIDESVIK OFFSHORE vs. AGF Management Limited | EIDESVIK OFFSHORE vs. Suntory Beverage Food | EIDESVIK OFFSHORE vs. Sims Metal Management |
| STORE ELECTRONIC vs. INTERNET INJPADR 1 | STORE ELECTRONIC vs. Shenandoah Telecommunications | STORE ELECTRONIC vs. EIDESVIK OFFSHORE NK | STORE ELECTRONIC vs. CSSC Offshore Marine |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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