Correlation Between Eidesvik Offshore and Magnora ASA
Can any of the company-specific risk be diversified away by investing in both Eidesvik Offshore and Magnora ASA 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 Magnora ASA 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 Magnora ASA, you can compare the effects of market volatilities on Eidesvik Offshore and Magnora ASA 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 Magnora ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eidesvik Offshore and Magnora ASA.
Diversification Opportunities for Eidesvik Offshore and Magnora ASA
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Eidesvik and Magnora is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Eidesvik Offshore ASA and Magnora ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magnora ASA 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 Magnora ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magnora ASA has no effect on the direction of Eidesvik Offshore i.e., Eidesvik Offshore and Magnora ASA go up and down completely randomly.
Pair Corralation between Eidesvik Offshore and Magnora ASA
Assuming the 90 days trading horizon Eidesvik Offshore ASA is expected to under-perform the Magnora ASA. But the stock apears to be less risky and, when comparing its historical volatility, Eidesvik Offshore ASA is 1.2 times less risky than Magnora ASA. The stock trades about -0.01 of its potential returns per unit of risk. The Magnora ASA is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 2,280 in Magnora ASA on August 29, 2024 and sell it today you would earn a total of 195.00 from holding Magnora ASA or generate 8.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eidesvik Offshore ASA vs. Magnora ASA
Performance |
| Timeline |
| Eidesvik Offshore ASA |
| Magnora ASA |
Eidesvik Offshore and Magnora ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eidesvik Offshore and Magnora ASA
The main advantage of trading using opposite Eidesvik Offshore and Magnora ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eidesvik Offshore position performs unexpectedly, Magnora ASA 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 Magnora ASA will offset losses from the drop in Magnora ASA's long position.| Eidesvik Offshore vs. Solstad Offsho | Eidesvik Offshore vs. Havila Shipping ASA | Eidesvik Offshore vs. Prosafe SE | Eidesvik Offshore vs. BW Offshore |
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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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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