Correlation Between EIDESVIK OFFSHORE and Carsales
Can any of the company-specific risk be diversified away by investing in both EIDESVIK OFFSHORE and Carsales 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 Carsales 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 Carsales, you can compare the effects of market volatilities on EIDESVIK OFFSHORE and Carsales 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 Carsales. Check out your portfolio center. Please also check ongoing floating volatility patterns of EIDESVIK OFFSHORE and Carsales.
Diversification Opportunities for EIDESVIK OFFSHORE and Carsales
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between EIDESVIK and Carsales is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding EIDESVIK OFFSHORE NK and Carsales in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carsales 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 Carsales. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carsales has no effect on the direction of EIDESVIK OFFSHORE i.e., EIDESVIK OFFSHORE and Carsales go up and down completely randomly.
Pair Corralation between EIDESVIK OFFSHORE and Carsales
Assuming the 90 days horizon EIDESVIK OFFSHORE is expected to generate 3.03 times less return on investment than Carsales. In addition to that, EIDESVIK OFFSHORE is 2.01 times more volatile than Carsales. It trades about 0.02 of its total potential returns per unit of risk. Carsales is currently generating about 0.09 per unit of volatility. If you would invest 2,064 in Carsales on September 3, 2024 and sell it today you would earn a total of 476.00 from holding Carsales or generate 23.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
EIDESVIK OFFSHORE NK vs. Carsales
Performance |
| Timeline |
| EIDESVIK OFFSHORE |
| Carsales |
EIDESVIK OFFSHORE and Carsales Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EIDESVIK OFFSHORE and Carsales
The main advantage of trading using opposite EIDESVIK OFFSHORE and Carsales positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EIDESVIK OFFSHORE position performs unexpectedly, Carsales 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 Carsales will offset losses from the drop in Carsales' long position.| EIDESVIK OFFSHORE vs. Apple Inc | EIDESVIK OFFSHORE vs. Apple Inc | EIDESVIK OFFSHORE vs. Apple Inc | EIDESVIK OFFSHORE vs. Apple Inc |
| Carsales vs. Thai Beverage Public | Carsales vs. Premier Foods PLC | Carsales vs. Food Life Companies | Carsales vs. CN MODERN DAIRY |
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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