Correlation Between Eidesvik Offshore and Telkom Indonesia
Can any of the company-specific risk be diversified away by investing in both Eidesvik Offshore and Telkom Indonesia 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 Telkom Indonesia 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 Telkom Indonesia Tbk, you can compare the effects of market volatilities on Eidesvik Offshore and Telkom Indonesia 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 Telkom Indonesia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eidesvik Offshore and Telkom Indonesia.
Diversification Opportunities for Eidesvik Offshore and Telkom Indonesia
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Eidesvik and Telkom is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Eidesvik Offshore ASA and Telkom Indonesia Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telkom Indonesia Tbk 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 Telkom Indonesia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telkom Indonesia Tbk has no effect on the direction of Eidesvik Offshore i.e., Eidesvik Offshore and Telkom Indonesia go up and down completely randomly.
Pair Corralation between Eidesvik Offshore and Telkom Indonesia
Assuming the 90 days trading horizon Eidesvik Offshore ASA is expected to generate 0.2 times more return on investment than Telkom Indonesia. However, Eidesvik Offshore ASA is 4.91 times less risky than Telkom Indonesia. It trades about 0.01 of its potential returns per unit of risk. Telkom Indonesia Tbk is currently generating about -0.01 per unit of risk. If you would invest 110.00 in Eidesvik Offshore ASA on September 13, 2024 and sell it today you would earn a total of 0.00 from holding Eidesvik Offshore ASA or generate 0.0% 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. Telkom Indonesia Tbk
Performance |
| Timeline |
| Eidesvik Offshore ASA |
| Telkom Indonesia Tbk |
Eidesvik Offshore and Telkom Indonesia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eidesvik Offshore and Telkom Indonesia
The main advantage of trading using opposite Eidesvik Offshore and Telkom Indonesia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eidesvik Offshore position performs unexpectedly, Telkom Indonesia 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 Telkom Indonesia will offset losses from the drop in Telkom Indonesia's long position.| Eidesvik Offshore vs. Tenaris SA | Eidesvik Offshore vs. NOV Inc | Eidesvik Offshore vs. Superior Plus Corp | Eidesvik Offshore vs. SIVERS SEMICONDUCTORS AB |
| Telkom Indonesia vs. BW OFFSHORE LTD | Telkom Indonesia vs. Eidesvik Offshore ASA | Telkom Indonesia vs. SOLSTAD OFFSHORE NK | Telkom Indonesia vs. WT OFFSHORE |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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