Correlation Between Prosafe SE and ECIT AS
Can any of the company-specific risk be diversified away by investing in both Prosafe SE and ECIT AS 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 Prosafe SE and ECIT AS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prosafe SE and ECIT AS, you can compare the effects of market volatilities on Prosafe SE and ECIT AS 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 Prosafe SE with a short position of ECIT AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prosafe SE and ECIT AS.
Diversification Opportunities for Prosafe SE and ECIT AS
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Prosafe and ECIT is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Prosafe SE and ECIT AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECIT AS and Prosafe SE 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 Prosafe SE are associated (or correlated) with ECIT AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECIT AS has no effect on the direction of Prosafe SE i.e., Prosafe SE and ECIT AS go up and down completely randomly.
Pair Corralation between Prosafe SE and ECIT AS
Assuming the 90 days trading horizon Prosafe SE is expected to under-perform the ECIT AS. In addition to that, Prosafe SE is 12.86 times more volatile than ECIT AS. It trades about -0.6 of its total potential returns per unit of risk. ECIT AS is currently generating about 0.23 per unit of volatility. If you would invest 960.00 in ECIT AS on August 28, 2024 and sell it today you would earn a total of 28.00 from holding ECIT AS or generate 2.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prosafe SE vs. ECIT AS
Performance |
| Timeline |
| Prosafe SE |
| ECIT AS |
Prosafe SE and ECIT AS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prosafe SE and ECIT AS
The main advantage of trading using opposite Prosafe SE and ECIT AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prosafe SE position performs unexpectedly, ECIT AS 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 ECIT AS will offset losses from the drop in ECIT AS's long position.The idea behind Prosafe SE and ECIT AS 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.| ECIT AS vs. Crayon Group Holding | ECIT AS vs. NRC Group ASA | ECIT AS vs. Pexip Holding ASA | ECIT AS vs. Europris 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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