Correlation Between EIDESVIK OFFSHORE and WESTLAKE CHEMICAL
Can any of the company-specific risk be diversified away by investing in both EIDESVIK OFFSHORE and WESTLAKE CHEMICAL 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 WESTLAKE CHEMICAL 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 WESTLAKE CHEMICAL, you can compare the effects of market volatilities on EIDESVIK OFFSHORE and WESTLAKE CHEMICAL 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 WESTLAKE CHEMICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of EIDESVIK OFFSHORE and WESTLAKE CHEMICAL.
Diversification Opportunities for EIDESVIK OFFSHORE and WESTLAKE CHEMICAL
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between EIDESVIK and WESTLAKE is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding EIDESVIK OFFSHORE NK and WESTLAKE CHEMICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WESTLAKE CHEMICAL 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 WESTLAKE CHEMICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WESTLAKE CHEMICAL has no effect on the direction of EIDESVIK OFFSHORE i.e., EIDESVIK OFFSHORE and WESTLAKE CHEMICAL go up and down completely randomly.
Pair Corralation between EIDESVIK OFFSHORE and WESTLAKE CHEMICAL
Assuming the 90 days horizon EIDESVIK OFFSHORE NK is expected to generate 1.76 times more return on investment than WESTLAKE CHEMICAL. However, EIDESVIK OFFSHORE is 1.76 times more volatile than WESTLAKE CHEMICAL. It trades about 0.04 of its potential returns per unit of risk. WESTLAKE CHEMICAL is currently generating about 0.01 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. WESTLAKE CHEMICAL
Performance |
| Timeline |
| EIDESVIK OFFSHORE |
| WESTLAKE CHEMICAL |
EIDESVIK OFFSHORE and WESTLAKE CHEMICAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EIDESVIK OFFSHORE and WESTLAKE CHEMICAL
The main advantage of trading using opposite EIDESVIK OFFSHORE and WESTLAKE CHEMICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EIDESVIK OFFSHORE position performs unexpectedly, WESTLAKE CHEMICAL 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 WESTLAKE CHEMICAL will offset losses from the drop in WESTLAKE CHEMICAL's long position.| EIDESVIK OFFSHORE vs. Apple Inc | EIDESVIK OFFSHORE vs. Apple Inc | EIDESVIK OFFSHORE vs. Apple Inc | EIDESVIK OFFSHORE vs. Apple Inc |
| WESTLAKE CHEMICAL vs. Insurance Australia Group | WESTLAKE CHEMICAL vs. SBI Insurance Group | WESTLAKE CHEMICAL vs. Singapore Reinsurance | WESTLAKE CHEMICAL vs. British American Tobacco |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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