Correlation Between Eidesvik Offshore and Tencent Holdings
Can any of the company-specific risk be diversified away by investing in both Eidesvik Offshore and Tencent Holdings 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 Tencent Holdings 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 Tencent Holdings Ltd, you can compare the effects of market volatilities on Eidesvik Offshore and Tencent Holdings 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 Tencent Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eidesvik Offshore and Tencent Holdings.
Diversification Opportunities for Eidesvik Offshore and Tencent Holdings
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Eidesvik and Tencent is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Eidesvik Offshore ASA and Tencent Holdings Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tencent Holdings 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 Tencent Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tencent Holdings has no effect on the direction of Eidesvik Offshore i.e., Eidesvik Offshore and Tencent Holdings go up and down completely randomly.
Pair Corralation between Eidesvik Offshore and Tencent Holdings
Assuming the 90 days trading horizon Eidesvik Offshore ASA is expected to generate 1.14 times more return on investment than Tencent Holdings. However, Eidesvik Offshore is 1.14 times more volatile than Tencent Holdings Ltd. It trades about 0.03 of its potential returns per unit of risk. Tencent Holdings Ltd is currently generating about -0.04 per unit of risk. If you would invest 110.00 in Eidesvik Offshore ASA on August 30, 2024 and sell it today you would earn a total of 1.00 from holding Eidesvik Offshore ASA or generate 0.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eidesvik Offshore ASA vs. Tencent Holdings Ltd
Performance |
| Timeline |
| Eidesvik Offshore ASA |
| Tencent Holdings |
Eidesvik Offshore and Tencent Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eidesvik Offshore and Tencent Holdings
The main advantage of trading using opposite Eidesvik Offshore and Tencent Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eidesvik Offshore position performs unexpectedly, Tencent Holdings 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 Tencent Holdings will offset losses from the drop in Tencent Holdings' long position.| Eidesvik Offshore vs. NOV Inc | Eidesvik Offshore vs. Superior Plus Corp | Eidesvik Offshore vs. NMI Holdings | Eidesvik Offshore vs. SIVERS SEMICONDUCTORS AB |
| Tencent Holdings vs. STMICROELECTRONICS | Tencent Holdings vs. Richardson Electronics | Tencent Holdings vs. ELECTRONIC ARTS | Tencent Holdings vs. UET United Electronic |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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