Correlation Between Eidesvik Offshore and Next Biometrics

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Can any of the company-specific risk be diversified away by investing in both Eidesvik Offshore and Next Biometrics 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 Next Biometrics 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 Next Biometrics Group, you can compare the effects of market volatilities on Eidesvik Offshore and Next Biometrics 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 Next Biometrics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eidesvik Offshore and Next Biometrics.

Diversification Opportunities for Eidesvik Offshore and Next Biometrics

0.85
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Eidesvik and Next is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Eidesvik Offshore ASA and Next Biometrics Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Next Biometrics Group 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 Next Biometrics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Next Biometrics Group has no effect on the direction of Eidesvik Offshore i.e., Eidesvik Offshore and Next Biometrics go up and down completely randomly.

Pair Corralation between Eidesvik Offshore and Next Biometrics

Assuming the 90 days trading horizon Eidesvik Offshore ASA is expected to generate 0.84 times more return on investment than Next Biometrics. However, Eidesvik Offshore ASA is 1.19 times less risky than Next Biometrics. It trades about -0.01 of its potential returns per unit of risk. Next Biometrics Group is currently generating about -0.07 per unit of risk. If you would invest  1,364  in Eidesvik Offshore ASA on August 29, 2024 and sell it today you would lose (14.00) from holding Eidesvik Offshore ASA or give up 1.03% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Eidesvik Offshore ASA  vs.  Next Biometrics Group

 Performance 
       Timeline  
Eidesvik Offshore ASA 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Eidesvik Offshore ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in December 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.
Next Biometrics Group 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Next Biometrics Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in December 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Eidesvik Offshore and Next Biometrics Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Eidesvik Offshore and Next Biometrics

The main advantage of trading using opposite Eidesvik Offshore and Next Biometrics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eidesvik Offshore position performs unexpectedly, Next Biometrics 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 Next Biometrics will offset losses from the drop in Next Biometrics' long position.
The idea behind Eidesvik Offshore ASA and Next Biometrics Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..

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