Correlation Between Electromagnetic Geoservices and SeaBird Exploration
Can any of the company-specific risk be diversified away by investing in both Electromagnetic Geoservices and SeaBird Exploration 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 SeaBird Exploration 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 SeaBird Exploration Plc, you can compare the effects of market volatilities on Electromagnetic Geoservices and SeaBird Exploration 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 SeaBird Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electromagnetic Geoservices and SeaBird Exploration.
Diversification Opportunities for Electromagnetic Geoservices and SeaBird Exploration
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Electromagnetic and SeaBird is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Electromagnetic Geoservices AS and SeaBird Exploration Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SeaBird Exploration Plc 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 SeaBird Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SeaBird Exploration Plc has no effect on the direction of Electromagnetic Geoservices i.e., Electromagnetic Geoservices and SeaBird Exploration go up and down completely randomly.
Pair Corralation between Electromagnetic Geoservices and SeaBird Exploration
Assuming the 90 days trading horizon Electromagnetic Geoservices is expected to generate 1.35 times less return on investment than SeaBird Exploration. In addition to that, Electromagnetic Geoservices is 2.27 times more volatile than SeaBird Exploration Plc. It trades about 0.03 of its total potential returns per unit of risk. SeaBird Exploration Plc is currently generating about 0.08 per unit of volatility. If you would invest 430.00 in SeaBird Exploration Plc on September 4, 2024 and sell it today you would earn a total of 143.00 from holding SeaBird Exploration Plc or generate 33.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Electromagnetic Geoservices AS vs. SeaBird Exploration Plc
Performance |
| Timeline |
| Electromagnetic Geoservices |
| SeaBird Exploration Plc |
Electromagnetic Geoservices and SeaBird Exploration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electromagnetic Geoservices and SeaBird Exploration
The main advantage of trading using opposite Electromagnetic Geoservices and SeaBird Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electromagnetic Geoservices position performs unexpectedly, SeaBird Exploration 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 SeaBird Exploration will offset losses from the drop in SeaBird Exploration's long position.| Electromagnetic Geoservices vs. BW Energy | Electromagnetic Geoservices vs. Subsea 7 SA | Electromagnetic Geoservices vs. BW LPG | Electromagnetic Geoservices vs. Dno ASA |
| SeaBird Exploration vs. Electromagnetic Geoservices ASA | SeaBird Exploration vs. TGS NOPEC Geophysical | SeaBird Exploration vs. Solstad Offsho | SeaBird Exploration vs. Prosafe SE |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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