Correlation Between WESTLAKE CHEMICAL and EIDESVIK OFFSHORE
Can any of the company-specific risk be diversified away by investing in both WESTLAKE CHEMICAL 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 WESTLAKE CHEMICAL and EIDESVIK OFFSHORE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WESTLAKE CHEMICAL and EIDESVIK OFFSHORE NK, you can compare the effects of market volatilities on WESTLAKE CHEMICAL 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 WESTLAKE CHEMICAL with a short position of EIDESVIK OFFSHORE. Check out your portfolio center. Please also check ongoing floating volatility patterns of WESTLAKE CHEMICAL and EIDESVIK OFFSHORE.
Diversification Opportunities for WESTLAKE CHEMICAL and EIDESVIK OFFSHORE
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between WESTLAKE and EIDESVIK is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding WESTLAKE CHEMICAL and EIDESVIK OFFSHORE NK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EIDESVIK OFFSHORE and WESTLAKE CHEMICAL 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 WESTLAKE CHEMICAL 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 has no effect on the direction of WESTLAKE CHEMICAL i.e., WESTLAKE CHEMICAL and EIDESVIK OFFSHORE go up and down completely randomly.
Pair Corralation between WESTLAKE CHEMICAL and EIDESVIK OFFSHORE
Assuming the 90 days trading horizon WESTLAKE CHEMICAL is expected to generate 4.68 times less return on investment than EIDESVIK OFFSHORE. But when comparing it to its historical volatility, WESTLAKE CHEMICAL is 1.76 times less risky than EIDESVIK OFFSHORE. It trades about 0.01 of its potential returns per unit of risk. EIDESVIK OFFSHORE NK is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 93.00 in EIDESVIK OFFSHORE NK on September 4, 2024 and sell it today you would earn a total of 17.00 from holding EIDESVIK OFFSHORE NK or generate 18.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WESTLAKE CHEMICAL vs. EIDESVIK OFFSHORE NK
Performance |
| Timeline |
| WESTLAKE CHEMICAL |
| EIDESVIK OFFSHORE |
WESTLAKE CHEMICAL and EIDESVIK OFFSHORE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WESTLAKE CHEMICAL and EIDESVIK OFFSHORE
The main advantage of trading using opposite WESTLAKE CHEMICAL and EIDESVIK OFFSHORE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WESTLAKE CHEMICAL 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.| WESTLAKE CHEMICAL vs. Insurance Australia Group | WESTLAKE CHEMICAL vs. SBI Insurance Group | WESTLAKE CHEMICAL vs. Singapore Reinsurance | WESTLAKE CHEMICAL vs. British American Tobacco |
| EIDESVIK OFFSHORE vs. Apple Inc | EIDESVIK OFFSHORE vs. Apple Inc | EIDESVIK OFFSHORE vs. Apple Inc | EIDESVIK OFFSHORE vs. Apple Inc |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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