Correlation Between Eidesvik Offshore and Alibaba Group
Can any of the company-specific risk be diversified away by investing in both Eidesvik Offshore and Alibaba Group 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 Alibaba Group 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 Alibaba Group Holding, you can compare the effects of market volatilities on Eidesvik Offshore and Alibaba Group 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 Alibaba Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eidesvik Offshore and Alibaba Group.
Diversification Opportunities for Eidesvik Offshore and Alibaba Group
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Eidesvik and Alibaba is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Eidesvik Offshore ASA and Alibaba Group Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alibaba Group Holding 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 Alibaba Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alibaba Group Holding has no effect on the direction of Eidesvik Offshore i.e., Eidesvik Offshore and Alibaba Group go up and down completely randomly.
Pair Corralation between Eidesvik Offshore and Alibaba Group
Assuming the 90 days trading horizon Eidesvik Offshore ASA is expected to generate 1.13 times more return on investment than Alibaba Group. However, Eidesvik Offshore is 1.13 times more volatile than Alibaba Group Holding. It trades about 0.05 of its potential returns per unit of risk. Alibaba Group Holding is currently generating about 0.02 per unit of risk. If you would invest 69.00 in Eidesvik Offshore ASA on September 20, 2024 and sell it today you would earn a total of 42.00 from holding Eidesvik Offshore ASA or generate 60.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eidesvik Offshore ASA vs. Alibaba Group Holding
Performance |
| Timeline |
| Eidesvik Offshore ASA |
| Alibaba Group Holding |
Eidesvik Offshore and Alibaba Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eidesvik Offshore and Alibaba Group
The main advantage of trading using opposite Eidesvik Offshore and Alibaba Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eidesvik Offshore position performs unexpectedly, Alibaba Group 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 Alibaba Group will offset losses from the drop in Alibaba Group's long position.| Eidesvik Offshore vs. Ryanair Holdings plc | Eidesvik Offshore vs. IMAGIN MEDICAL INC | Eidesvik Offshore vs. Westinghouse Air Brake | Eidesvik Offshore vs. MEDICAL FACILITIES NEW |
| Alibaba Group vs. SANOK RUBBER ZY | Alibaba Group vs. Eidesvik Offshore ASA | Alibaba Group vs. FLOW TRADERS LTD | Alibaba Group vs. Applied Materials |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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