Correlation Between Eidesvik Offshore and ORIX
Can any of the company-specific risk be diversified away by investing in both Eidesvik Offshore and ORIX 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 ORIX 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 ORIX Corporation, you can compare the effects of market volatilities on Eidesvik Offshore and ORIX 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 ORIX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eidesvik Offshore and ORIX.
Diversification Opportunities for Eidesvik Offshore and ORIX
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Eidesvik and ORIX is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Eidesvik Offshore ASA and ORIX Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ORIX 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 ORIX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ORIX has no effect on the direction of Eidesvik Offshore i.e., Eidesvik Offshore and ORIX go up and down completely randomly.
Pair Corralation between Eidesvik Offshore and ORIX
Assuming the 90 days trading horizon Eidesvik Offshore is expected to generate 7.27 times less return on investment than ORIX. But when comparing it to its historical volatility, Eidesvik Offshore ASA is 1.57 times less risky than ORIX. It trades about 0.04 of its potential returns per unit of risk. ORIX Corporation is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 1,950 in ORIX Corporation on September 4, 2024 and sell it today you would earn a total of 150.00 from holding ORIX Corporation or generate 7.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Eidesvik Offshore ASA vs. ORIX Corp.
Performance |
| Timeline |
| Eidesvik Offshore ASA |
| ORIX |
Eidesvik Offshore and ORIX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eidesvik Offshore and ORIX
The main advantage of trading using opposite Eidesvik Offshore and ORIX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eidesvik Offshore position performs unexpectedly, ORIX 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 ORIX will offset losses from the drop in ORIX's long position.| Eidesvik Offshore vs. Halliburton | Eidesvik Offshore vs. Superior Plus Corp | Eidesvik Offshore vs. NMI Holdings | Eidesvik Offshore vs. Origin Agritech |
| ORIX vs. BW OFFSHORE LTD | ORIX vs. Eidesvik Offshore ASA | ORIX vs. American Public Education | ORIX vs. Perdoceo Education |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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