Correlation Between Subsea 7 and Eidesvik Offshore
Can any of the company-specific risk be diversified away by investing in both Subsea 7 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 Subsea 7 and Eidesvik Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Subsea 7 SA and Eidesvik Offshore ASA, you can compare the effects of market volatilities on Subsea 7 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 Subsea 7 with a short position of Eidesvik Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Subsea 7 and Eidesvik Offshore.
Diversification Opportunities for Subsea 7 and Eidesvik Offshore
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Subsea and Eidesvik is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Subsea 7 SA 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 Subsea 7 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 Subsea 7 SA 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 Subsea 7 i.e., Subsea 7 and Eidesvik Offshore go up and down completely randomly.
Pair Corralation between Subsea 7 and Eidesvik Offshore
Assuming the 90 days trading horizon Subsea 7 SA is expected to generate 1.25 times more return on investment than Eidesvik Offshore. However, Subsea 7 is 1.25 times more volatile than Eidesvik Offshore ASA. It trades about 0.1 of its potential returns per unit of risk. Eidesvik Offshore ASA is currently generating about -0.05 per unit of risk. If you would invest 16,870 in Subsea 7 SA on September 3, 2024 and sell it today you would earn a total of 560.00 from holding Subsea 7 SA or generate 3.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Subsea 7 SA vs. Eidesvik Offshore ASA
Performance |
| Timeline |
| Subsea 7 SA |
| Eidesvik Offshore ASA |
Subsea 7 and Eidesvik Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Subsea 7 and Eidesvik Offshore
The main advantage of trading using opposite Subsea 7 and Eidesvik Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Subsea 7 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.| Subsea 7 vs. TGS NOPEC Geophysical | Subsea 7 vs. Aker Solutions ASA | Subsea 7 vs. Storebrand ASA | Subsea 7 vs. Dno ASA |
| Eidesvik Offshore vs. BW Energy | Eidesvik Offshore vs. Subsea 7 SA | Eidesvik Offshore vs. BW LPG | Eidesvik Offshore vs. Dno 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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