Correlation Between Eidesvik Offshore and RATIONAL Aktiengesellscha
Can any of the company-specific risk be diversified away by investing in both Eidesvik Offshore and RATIONAL Aktiengesellscha 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 RATIONAL Aktiengesellscha 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 RATIONAL Aktiengesellschaft, you can compare the effects of market volatilities on Eidesvik Offshore and RATIONAL Aktiengesellscha 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 RATIONAL Aktiengesellscha. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eidesvik Offshore and RATIONAL Aktiengesellscha.
Diversification Opportunities for Eidesvik Offshore and RATIONAL Aktiengesellscha
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Eidesvik and RATIONAL is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Eidesvik Offshore ASA and RATIONAL Aktiengesellschaft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RATIONAL Aktiengesellscha 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 RATIONAL Aktiengesellscha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RATIONAL Aktiengesellscha has no effect on the direction of Eidesvik Offshore i.e., Eidesvik Offshore and RATIONAL Aktiengesellscha go up and down completely randomly.
Pair Corralation between Eidesvik Offshore and RATIONAL Aktiengesellscha
Assuming the 90 days trading horizon Eidesvik Offshore ASA is expected to generate 1.78 times more return on investment than RATIONAL Aktiengesellscha. However, Eidesvik Offshore is 1.78 times more volatile than RATIONAL Aktiengesellschaft. It trades about 0.04 of its potential returns per unit of risk. RATIONAL Aktiengesellschaft is currently generating about 0.04 per unit of risk. If you would invest 76.00 in Eidesvik Offshore ASA on October 12, 2024 and sell it today you would earn a total of 41.00 from holding Eidesvik Offshore ASA or generate 53.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eidesvik Offshore ASA vs. RATIONAL Aktiengesellschaft
Performance |
| Timeline |
| Eidesvik Offshore ASA |
| RATIONAL Aktiengesellscha |
Eidesvik Offshore and RATIONAL Aktiengesellscha Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eidesvik Offshore and RATIONAL Aktiengesellscha
The main advantage of trading using opposite Eidesvik Offshore and RATIONAL Aktiengesellscha positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eidesvik Offshore position performs unexpectedly, RATIONAL Aktiengesellscha 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 RATIONAL Aktiengesellscha will offset losses from the drop in RATIONAL Aktiengesellscha's long position.| Eidesvik Offshore vs. SINGAPORE AIRLINES | Eidesvik Offshore vs. Tsingtao Brewery | Eidesvik Offshore vs. China Eastern Airlines | Eidesvik Offshore vs. Fevertree Drinks PLC |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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