Correlation Between Melhus Sparebank and Eidesvik Offshore
Can any of the company-specific risk be diversified away by investing in both Melhus Sparebank 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 Melhus Sparebank and Eidesvik Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Melhus Sparebank and Eidesvik Offshore ASA, you can compare the effects of market volatilities on Melhus Sparebank 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 Melhus Sparebank with a short position of Eidesvik Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Melhus Sparebank and Eidesvik Offshore.
Diversification Opportunities for Melhus Sparebank and Eidesvik Offshore
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Melhus and Eidesvik is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Melhus Sparebank 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 Melhus Sparebank 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 Melhus Sparebank 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 Melhus Sparebank i.e., Melhus Sparebank and Eidesvik Offshore go up and down completely randomly.
Pair Corralation between Melhus Sparebank and Eidesvik Offshore
Assuming the 90 days trading horizon Melhus Sparebank is expected to generate 2.8 times less return on investment than Eidesvik Offshore. But when comparing it to its historical volatility, Melhus Sparebank is 2.29 times less risky than Eidesvik Offshore. It trades about 0.04 of its potential returns per unit of risk. Eidesvik Offshore ASA is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 857.00 in Eidesvik Offshore ASA on August 29, 2024 and sell it today you would earn a total of 493.00 from holding Eidesvik Offshore ASA or generate 57.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Melhus Sparebank vs. Eidesvik Offshore ASA
Performance |
| Timeline |
| Melhus Sparebank |
| Eidesvik Offshore ASA |
Melhus Sparebank and Eidesvik Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Melhus Sparebank and Eidesvik Offshore
The main advantage of trading using opposite Melhus Sparebank and Eidesvik Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Melhus Sparebank 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.The idea behind Melhus Sparebank and Eidesvik Offshore ASA 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.| 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 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..
Other Complementary Tools
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum |