Correlation Between EIDESVIK OFFSHORE and X Fab
Can any of the company-specific risk be diversified away by investing in both EIDESVIK OFFSHORE and X Fab 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 X Fab 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 X Fab Silicon, you can compare the effects of market volatilities on EIDESVIK OFFSHORE and X Fab 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 X Fab. Check out your portfolio center. Please also check ongoing floating volatility patterns of EIDESVIK OFFSHORE and X Fab.
Diversification Opportunities for EIDESVIK OFFSHORE and X Fab
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between EIDESVIK and XFB is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding EIDESVIK OFFSHORE NK and X Fab Silicon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X Fab Silicon 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 X Fab. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X Fab Silicon has no effect on the direction of EIDESVIK OFFSHORE i.e., EIDESVIK OFFSHORE and X Fab go up and down completely randomly.
Pair Corralation between EIDESVIK OFFSHORE and X Fab
Assuming the 90 days horizon EIDESVIK OFFSHORE is expected to generate 1.01 times less return on investment than X Fab. But when comparing it to its historical volatility, EIDESVIK OFFSHORE NK is 1.9 times less risky than X Fab. It trades about 0.07 of its potential returns per unit of risk. X Fab Silicon is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 422.00 in X Fab Silicon on September 6, 2024 and sell it today you would earn a total of 6.00 from holding X Fab Silicon or generate 1.42% 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. X Fab Silicon
Performance |
| Timeline |
| EIDESVIK OFFSHORE |
| X Fab Silicon |
EIDESVIK OFFSHORE and X Fab Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EIDESVIK OFFSHORE and X Fab
The main advantage of trading using opposite EIDESVIK OFFSHORE and X Fab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EIDESVIK OFFSHORE position performs unexpectedly, X Fab 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 X Fab will offset losses from the drop in X Fab's long position.| EIDESVIK OFFSHORE vs. Tencent Music Entertainment | EIDESVIK OFFSHORE vs. United Natural Foods | EIDESVIK OFFSHORE vs. PT Global Mediacom | EIDESVIK OFFSHORE vs. National Beverage Corp |
| X Fab vs. Beijing Media | X Fab vs. Chongqing Machinery Electric | X Fab vs. Hollywood Bowl Group | X Fab vs. Hanison Construction Holdings |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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