Correlation Between Electromagnetic Geoservices and Odfjell Drilling
Can any of the company-specific risk be diversified away by investing in both Electromagnetic Geoservices and Odfjell Drilling 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 Electromagnetic Geoservices and Odfjell Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electromagnetic Geoservices ASA and Odfjell Drilling, you can compare the effects of market volatilities on Electromagnetic Geoservices and Odfjell Drilling 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 Electromagnetic Geoservices with a short position of Odfjell Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electromagnetic Geoservices and Odfjell Drilling.
Diversification Opportunities for Electromagnetic Geoservices and Odfjell Drilling
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Electromagnetic and Odfjell is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Electromagnetic Geoservices AS and Odfjell Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Odfjell Drilling and Electromagnetic Geoservices 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 Electromagnetic Geoservices ASA are associated (or correlated) with Odfjell Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Odfjell Drilling has no effect on the direction of Electromagnetic Geoservices i.e., Electromagnetic Geoservices and Odfjell Drilling go up and down completely randomly.
Pair Corralation between Electromagnetic Geoservices and Odfjell Drilling
Assuming the 90 days trading horizon Electromagnetic Geoservices is expected to generate 4.08 times less return on investment than Odfjell Drilling. In addition to that, Electromagnetic Geoservices is 1.91 times more volatile than Odfjell Drilling. It trades about 0.01 of its total potential returns per unit of risk. Odfjell Drilling is currently generating about 0.1 per unit of volatility. If you would invest 2,380 in Odfjell Drilling on October 25, 2024 and sell it today you would earn a total of 3,670 from holding Odfjell Drilling or generate 154.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Electromagnetic Geoservices AS vs. Odfjell Drilling
Performance |
| Timeline |
| Electromagnetic Geoservices |
| Odfjell Drilling |
Electromagnetic Geoservices and Odfjell Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electromagnetic Geoservices and Odfjell Drilling
The main advantage of trading using opposite Electromagnetic Geoservices and Odfjell Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electromagnetic Geoservices position performs unexpectedly, Odfjell Drilling 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 Odfjell Drilling will offset losses from the drop in Odfjell Drilling's long position.| Electromagnetic Geoservices vs. Prosafe SE | Electromagnetic Geoservices vs. TGS NOPEC Geophysical | Electromagnetic Geoservices vs. SeaBird Exploration Plc | Electromagnetic Geoservices vs. BW 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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