Correlation Between Eidesvik Offshore and NIPPON STEEL
Can any of the company-specific risk be diversified away by investing in both Eidesvik Offshore and NIPPON STEEL 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 NIPPON STEEL 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 NIPPON STEEL SPADR, you can compare the effects of market volatilities on Eidesvik Offshore and NIPPON STEEL 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 NIPPON STEEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eidesvik Offshore and NIPPON STEEL.
Diversification Opportunities for Eidesvik Offshore and NIPPON STEEL
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Eidesvik and NIPPON is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Eidesvik Offshore ASA and NIPPON STEEL SPADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NIPPON STEEL SPADR 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 NIPPON STEEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NIPPON STEEL SPADR has no effect on the direction of Eidesvik Offshore i.e., Eidesvik Offshore and NIPPON STEEL go up and down completely randomly.
Pair Corralation between Eidesvik Offshore and NIPPON STEEL
Assuming the 90 days trading horizon Eidesvik Offshore is expected to generate 6.53 times less return on investment than NIPPON STEEL. In addition to that, Eidesvik Offshore is 1.7 times more volatile than NIPPON STEEL SPADR. It trades about 0.01 of its total potential returns per unit of risk. NIPPON STEEL SPADR is currently generating about 0.12 per unit of volatility. If you would invest 585.00 in NIPPON STEEL SPADR on August 29, 2024 and sell it today you would earn a total of 20.00 from holding NIPPON STEEL SPADR or generate 3.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eidesvik Offshore ASA vs. NIPPON STEEL SPADR
Performance |
| Timeline |
| Eidesvik Offshore ASA |
| NIPPON STEEL SPADR |
Eidesvik Offshore and NIPPON STEEL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eidesvik Offshore and NIPPON STEEL
The main advantage of trading using opposite Eidesvik Offshore and NIPPON STEEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eidesvik Offshore position performs unexpectedly, NIPPON STEEL 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 NIPPON STEEL will offset losses from the drop in NIPPON STEEL's long position.| Eidesvik Offshore vs. Jacquet Metal Service | Eidesvik Offshore vs. Summit Hotel Properties | Eidesvik Offshore vs. American Airlines Group | Eidesvik Offshore vs. MIRAMAR HOTEL INV |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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