Correlation Between Eidesvik Offshore and NEXTDC
Can any of the company-specific risk be diversified away by investing in both Eidesvik Offshore and NEXTDC 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 NEXTDC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eidesvik Offshore ASA and NEXTDC LTD, you can compare the effects of market volatilities on Eidesvik Offshore and NEXTDC 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 NEXTDC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eidesvik Offshore and NEXTDC.
Diversification Opportunities for Eidesvik Offshore and NEXTDC
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Eidesvik and NEXTDC is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Eidesvik Offshore ASA and NEXTDC LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEXTDC LTD 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 ASA are associated (or correlated) with NEXTDC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEXTDC LTD has no effect on the direction of Eidesvik Offshore i.e., Eidesvik Offshore and NEXTDC go up and down completely randomly.
Pair Corralation between Eidesvik Offshore and NEXTDC
Assuming the 90 days trading horizon Eidesvik Offshore is expected to generate 7.75 times less return on investment than NEXTDC. In addition to that, Eidesvik Offshore is 1.09 times more volatile than NEXTDC LTD. It trades about 0.01 of its total potential returns per unit of risk. NEXTDC LTD is currently generating about 0.1 per unit of volatility. If you would invest 900.00 in NEXTDC LTD on October 28, 2024 and sell it today you would earn a total of 40.00 from holding NEXTDC LTD or generate 4.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eidesvik Offshore ASA vs. NEXTDC LTD
Performance |
| Timeline |
| Eidesvik Offshore ASA |
| NEXTDC LTD |
Eidesvik Offshore and NEXTDC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eidesvik Offshore and NEXTDC
The main advantage of trading using opposite Eidesvik Offshore and NEXTDC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eidesvik Offshore position performs unexpectedly, NEXTDC 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 NEXTDC will offset losses from the drop in NEXTDC's long position.| Eidesvik Offshore vs. Costco Wholesale Corp | Eidesvik Offshore vs. Grupo Carso SAB | Eidesvik Offshore vs. GEELY AUTOMOBILE | Eidesvik Offshore vs. MARKET VECTR RETAIL |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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