Correlation Between Subsea 7 and Electromagnetic Geoservices
Can any of the company-specific risk be diversified away by investing in both Subsea 7 and Electromagnetic Geoservices 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 Electromagnetic Geoservices 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 Electromagnetic Geoservices ASA, you can compare the effects of market volatilities on Subsea 7 and Electromagnetic Geoservices 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 Electromagnetic Geoservices. Check out your portfolio center. Please also check ongoing floating volatility patterns of Subsea 7 and Electromagnetic Geoservices.
Diversification Opportunities for Subsea 7 and Electromagnetic Geoservices
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Subsea and Electromagnetic is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Subsea 7 SA and Electromagnetic Geoservices AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electromagnetic Geoservices 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 Electromagnetic Geoservices. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electromagnetic Geoservices has no effect on the direction of Subsea 7 i.e., Subsea 7 and Electromagnetic Geoservices go up and down completely randomly.
Pair Corralation between Subsea 7 and Electromagnetic Geoservices
Assuming the 90 days trading horizon Subsea 7 SA is expected to generate 0.68 times more return on investment than Electromagnetic Geoservices. However, Subsea 7 SA is 1.47 times less risky than Electromagnetic Geoservices. It trades about -0.01 of its potential returns per unit of risk. Electromagnetic Geoservices ASA is currently generating about -0.01 per unit of risk. If you would invest 17,608 in Subsea 7 SA on September 12, 2024 and sell it today you would lose (398.00) from holding Subsea 7 SA or give up 2.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.46% |
| Values | Daily Returns |
Subsea 7 SA vs. Electromagnetic Geoservices AS
Performance |
| Timeline |
| Subsea 7 SA |
| Electromagnetic Geoservices |
Subsea 7 and Electromagnetic Geoservices Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Subsea 7 and Electromagnetic Geoservices
The main advantage of trading using opposite Subsea 7 and Electromagnetic Geoservices positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Subsea 7 position performs unexpectedly, Electromagnetic Geoservices 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 Electromagnetic Geoservices will offset losses from the drop in Electromagnetic Geoservices' long position.| Subsea 7 vs. TGS NOPEC Geophysical | Subsea 7 vs. Aker Solutions ASA | Subsea 7 vs. Storebrand ASA | Subsea 7 vs. Dno ASA |
| Electromagnetic Geoservices vs. Prosafe SE | Electromagnetic Geoservices vs. TGS NOPEC Geophysical | Electromagnetic Geoservices vs. SeaBird Exploration Plc | Electromagnetic Geoservices 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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