Correlation Between Reach Subsea and Crayon Group
Can any of the company-specific risk be diversified away by investing in both Reach Subsea and Crayon Group 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 Reach Subsea and Crayon Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Reach Subsea and Crayon Group Holding, you can compare the effects of market volatilities on Reach Subsea and Crayon Group 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 Reach Subsea with a short position of Crayon Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reach Subsea and Crayon Group.
Diversification Opportunities for Reach Subsea and Crayon Group
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Reach and Crayon is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Reach Subsea and Crayon Group Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crayon Group Holding and Reach Subsea 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 Reach Subsea are associated (or correlated) with Crayon Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crayon Group Holding has no effect on the direction of Reach Subsea i.e., Reach Subsea and Crayon Group go up and down completely randomly.
Pair Corralation between Reach Subsea and Crayon Group
Assuming the 90 days trading horizon Reach Subsea is expected to generate 0.69 times more return on investment than Crayon Group. However, Reach Subsea is 1.45 times less risky than Crayon Group. It trades about 0.09 of its potential returns per unit of risk. Crayon Group Holding is currently generating about 0.02 per unit of risk. If you would invest 371.00 in Reach Subsea on September 3, 2024 and sell it today you would earn a total of 547.00 from holding Reach Subsea or generate 147.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Reach Subsea vs. Crayon Group Holding
Performance |
| Timeline |
| Reach Subsea |
| Crayon Group Holding |
Reach Subsea and Crayon Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reach Subsea and Crayon Group
The main advantage of trading using opposite Reach Subsea and Crayon Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reach Subsea position performs unexpectedly, Crayon Group 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 Crayon Group will offset losses from the drop in Crayon Group's long position.| Reach Subsea vs. BW Offshore | Reach Subsea vs. Eidesvik Offshore ASA | Reach Subsea vs. Solstad Offsho | Reach Subsea vs. Odfjell Drilling |
| Crayon Group vs. Zaptec AS | Crayon Group vs. Nordic Semiconductor ASA | Crayon Group vs. Scatec Solar OL | Crayon Group vs. Kitron 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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