Correlation Between Equinor ASA and Sea1 Offshore
Can any of the company-specific risk be diversified away by investing in both Equinor ASA and Sea1 Offshore 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 Equinor ASA and Sea1 Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equinor ASA and Sea1 Offshore, you can compare the effects of market volatilities on Equinor ASA and Sea1 Offshore 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 Equinor ASA with a short position of Sea1 Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equinor ASA and Sea1 Offshore.
Diversification Opportunities for Equinor ASA and Sea1 Offshore
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Equinor and Sea1 is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Equinor ASA and Sea1 Offshore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sea1 Offshore and Equinor ASA 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 Equinor ASA are associated (or correlated) with Sea1 Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sea1 Offshore has no effect on the direction of Equinor ASA i.e., Equinor ASA and Sea1 Offshore go up and down completely randomly.
Pair Corralation between Equinor ASA and Sea1 Offshore
Assuming the 90 days trading horizon Equinor ASA is expected to under-perform the Sea1 Offshore. But the stock apears to be less risky and, when comparing its historical volatility, Equinor ASA is 1.63 times less risky than Sea1 Offshore. The stock trades about 0.0 of its potential returns per unit of risk. The Sea1 Offshore is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,118 in Sea1 Offshore on August 29, 2024 and sell it today you would earn a total of 812.00 from holding Sea1 Offshore or generate 38.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Equinor ASA vs. Sea1 Offshore
Performance |
| Timeline |
| Equinor ASA |
| Sea1 Offshore |
Equinor ASA and Sea1 Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equinor ASA and Sea1 Offshore
The main advantage of trading using opposite Equinor ASA and Sea1 Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equinor ASA position performs unexpectedly, Sea1 Offshore 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 Sea1 Offshore will offset losses from the drop in Sea1 Offshore's long position.| Equinor ASA vs. DnB ASA | Equinor ASA vs. Mowi ASA | Equinor ASA vs. Yara International ASA | Equinor ASA vs. Telenor ASA |
| Sea1 Offshore vs. Equinor ASA | Sea1 Offshore vs. DnB ASA | Sea1 Offshore vs. Aker BP ASA | Sea1 Offshore vs. Telenor ASA |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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