Correlation Between Prosafe SE and Eidesvik Offshore
Can any of the company-specific risk be diversified away by investing in both Prosafe SE 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 Prosafe SE and Eidesvik Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prosafe SE and Eidesvik Offshore ASA, you can compare the effects of market volatilities on Prosafe SE 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 Prosafe SE with a short position of Eidesvik Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prosafe SE and Eidesvik Offshore.
Diversification Opportunities for Prosafe SE and Eidesvik Offshore
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Prosafe and Eidesvik is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Prosafe SE 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 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 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 Prosafe SE i.e., Prosafe SE and Eidesvik Offshore go up and down completely randomly.
Pair Corralation between Prosafe SE and Eidesvik Offshore
Assuming the 90 days trading horizon Prosafe SE is expected to under-perform the Eidesvik Offshore. In addition to that, Prosafe SE is 3.38 times more volatile than Eidesvik Offshore ASA. It trades about -0.62 of its total potential returns per unit of risk. Eidesvik Offshore ASA is currently generating about -0.01 per unit of volatility. If you would invest 1,364 in Eidesvik Offshore ASA on August 29, 2024 and sell it today you would lose (14.00) from holding Eidesvik Offshore ASA or give up 1.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prosafe SE vs. Eidesvik Offshore ASA
Performance |
| Timeline |
| Prosafe SE |
| Eidesvik Offshore ASA |
Prosafe SE and Eidesvik Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prosafe SE and Eidesvik Offshore
The main advantage of trading using opposite Prosafe SE and Eidesvik Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prosafe SE 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 Prosafe SE 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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