Correlation Between Eidesvik Offshore and Align Technology
Can any of the company-specific risk be diversified away by investing in both Eidesvik Offshore and Align Technology 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 Align Technology 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 Align Technology, you can compare the effects of market volatilities on Eidesvik Offshore and Align Technology 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 Align Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eidesvik Offshore and Align Technology.
Diversification Opportunities for Eidesvik Offshore and Align Technology
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Eidesvik and Align is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Eidesvik Offshore ASA and Align Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Align Technology 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 Align Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Align Technology has no effect on the direction of Eidesvik Offshore i.e., Eidesvik Offshore and Align Technology go up and down completely randomly.
Pair Corralation between Eidesvik Offshore and Align Technology
Assuming the 90 days trading horizon Eidesvik Offshore ASA is expected to generate 1.3 times more return on investment than Align Technology. However, Eidesvik Offshore is 1.3 times more volatile than Align Technology. It trades about 0.05 of its potential returns per unit of risk. Align Technology is currently generating about -0.05 per unit of risk. If you would invest 91.00 in Eidesvik Offshore ASA on October 22, 2024 and sell it today you would earn a total of 21.00 from holding Eidesvik Offshore ASA or generate 23.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.56% |
| Values | Daily Returns |
Eidesvik Offshore ASA vs. Align Technology
Performance |
| Timeline |
| Eidesvik Offshore ASA |
| Align Technology |
Eidesvik Offshore and Align Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eidesvik Offshore and Align Technology
The main advantage of trading using opposite Eidesvik Offshore and Align Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eidesvik Offshore position performs unexpectedly, Align Technology 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 Align Technology will offset losses from the drop in Align Technology's long position.| Eidesvik Offshore vs. MAG SILVER | Eidesvik Offshore vs. Zijin Mining Group | Eidesvik Offshore vs. GALENA MINING LTD | Eidesvik Offshore vs. SILICON LABORATOR |
| Align Technology vs. AGRICULTBK HADR25 YC | Align Technology vs. DAIDO METAL TD | Align Technology vs. Jacquet Metal Service | Align Technology vs. Tokyu Construction Co |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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