Correlation Between Sibanye Stillwater and EIDESVIK OFFSHORE

Can any of the company-specific risk be diversified away by investing in both Sibanye Stillwater 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 Sibanye Stillwater and EIDESVIK OFFSHORE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sibanye Stillwater Limited and EIDESVIK OFFSHORE NK, you can compare the effects of market volatilities on Sibanye Stillwater 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 Sibanye Stillwater with a short position of EIDESVIK OFFSHORE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sibanye Stillwater and EIDESVIK OFFSHORE.

Diversification Opportunities for Sibanye Stillwater and EIDESVIK OFFSHORE

0.09

Correlation Coefficient

Sibanye Stillwater  EIDESVIK OFFSHORE

Significant diversification

The 3 months correlation between Sibanye and EIDESVIK is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Sibanye Stillwater Limited and EIDESVIK OFFSHORE NK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EIDESVIK OFFSHORE and Sibanye Stillwater 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 Sibanye Stillwater Limited 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 Sibanye Stillwater i.e., Sibanye Stillwater and EIDESVIK OFFSHORE go up and down completely randomly.

Pair Corralation between Sibanye Stillwater and EIDESVIK OFFSHORE

Assuming the 90 days horizon Sibanye Stillwater Limited is expected to under-perform the EIDESVIK OFFSHORE. In addition to that, Sibanye Stillwater is 1.53 times more volatile than EIDESVIK OFFSHORE NK. It trades about 0.0 of its total potential returns per unit of risk. EIDESVIK OFFSHORE NK is currently generating about 0.04 per unit of volatility. If you would invest  73.00  in EIDESVIK OFFSHORE NK on October 11, 2024 and sell it today you would earn a total of  39.00  from holding EIDESVIK OFFSHORE NK or generate 53.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Sibanye Stillwater Limited  vs.  EIDESVIK OFFSHORE NK

Sibanye Stillwater

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sibanye Stillwater Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Sibanye Stillwater is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

EIDESVIK OFFSHORE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EIDESVIK OFFSHORE NK has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, EIDESVIK OFFSHORE is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Sibanye Stillwater and EIDESVIK OFFSHORE

The main advantage of trading using opposite Sibanye Stillwater and EIDESVIK OFFSHORE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sibanye Stillwater 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 Sibanye Stillwater Limited and EIDESVIK OFFSHORE NK 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.

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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.