Correlation Between Eidesvik Offshore and Carnegie Clean
Can any of the company-specific risk be diversified away by investing in both Eidesvik Offshore and Carnegie Clean 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 Carnegie Clean 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 Carnegie Clean Energy, you can compare the effects of market volatilities on Eidesvik Offshore and Carnegie Clean 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 Carnegie Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eidesvik Offshore and Carnegie Clean.
Diversification Opportunities for Eidesvik Offshore and Carnegie Clean
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Eidesvik and Carnegie is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Eidesvik Offshore ASA and Carnegie Clean Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carnegie Clean Energy 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 Carnegie Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carnegie Clean Energy has no effect on the direction of Eidesvik Offshore i.e., Eidesvik Offshore and Carnegie Clean go up and down completely randomly.
Pair Corralation between Eidesvik Offshore and Carnegie Clean
Assuming the 90 days trading horizon Eidesvik Offshore ASA is expected to under-perform the Carnegie Clean. But the stock apears to be less risky and, when comparing its historical volatility, Eidesvik Offshore ASA is 2.85 times less risky than Carnegie Clean. The stock trades about -0.09 of its potential returns per unit of risk. The Carnegie Clean Energy is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2.04 in Carnegie Clean Energy on November 5, 2024 and sell it today you would earn a total of 0.06 from holding Carnegie Clean Energy or generate 2.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eidesvik Offshore ASA vs. Carnegie Clean Energy
Performance |
| Timeline |
| Eidesvik Offshore ASA |
| Carnegie Clean Energy |
Eidesvik Offshore and Carnegie Clean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eidesvik Offshore and Carnegie Clean
The main advantage of trading using opposite Eidesvik Offshore and Carnegie Clean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eidesvik Offshore position performs unexpectedly, Carnegie Clean 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 Carnegie Clean will offset losses from the drop in Carnegie Clean's long position.| Eidesvik Offshore vs. MCEWEN MINING INC | Eidesvik Offshore vs. GREENX METALS LTD | Eidesvik Offshore vs. MAGNUM MINING EXP | Eidesvik Offshore vs. Endeavour Mining PLC |
| Carnegie Clean vs. Transport International Holdings | Carnegie Clean vs. NTG Nordic Transport | Carnegie Clean vs. Guidewire Software | Carnegie Clean vs. Kingdee International Software |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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