Correlation Between Kraft Bank and Eidesvik Offshore
Can any of the company-specific risk be diversified away by investing in both Kraft Bank and Eidesvik 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 Kraft Bank and Eidesvik Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kraft Bank Asa and Eidesvik Offshore ASA, you can compare the effects of market volatilities on Kraft Bank and Eidesvik 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 Kraft Bank with a short position of Eidesvik Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kraft Bank and Eidesvik Offshore.
Diversification Opportunities for Kraft Bank and Eidesvik Offshore
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Kraft and Eidesvik is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Kraft Bank Asa and Eidesvik Offshore ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eidesvik Offshore ASA and Kraft Bank 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 Kraft Bank Asa are associated (or correlated) with Eidesvik Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eidesvik Offshore ASA has no effect on the direction of Kraft Bank i.e., Kraft Bank and Eidesvik Offshore go up and down completely randomly.
Pair Corralation between Kraft Bank and Eidesvik Offshore
Assuming the 90 days trading horizon Kraft Bank Asa is expected to under-perform the Eidesvik Offshore. But the stock apears to be less risky and, when comparing its historical volatility, Kraft Bank Asa is 1.01 times less risky than Eidesvik Offshore. The stock trades about -0.07 of its potential returns per unit of risk. The Eidesvik Offshore ASA is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,350 in Eidesvik Offshore ASA on October 26, 2024 and sell it today you would earn a total of 18.00 from holding Eidesvik Offshore ASA or generate 1.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kraft Bank Asa vs. Eidesvik Offshore ASA
Performance |
| Timeline |
| Kraft Bank Asa |
| Eidesvik Offshore ASA |
Kraft Bank and Eidesvik Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kraft Bank and Eidesvik Offshore
The main advantage of trading using opposite Kraft Bank and Eidesvik Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kraft Bank position performs unexpectedly, Eidesvik 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 Eidesvik Offshore will offset losses from the drop in Eidesvik Offshore's long position.| Kraft Bank vs. Sea1 Offshore | Kraft Bank vs. Melhus Sparebank | Kraft Bank vs. Helgeland Sparebank | Kraft Bank vs. Awilco Drilling PLC |
| Eidesvik Offshore vs. Solstad Offsho | Eidesvik Offshore vs. Havila Shipping ASA | Eidesvik Offshore vs. Prosafe SE | Eidesvik Offshore 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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