Correlation Between BC IRON and EIDESVIK OFFSHORE

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

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

Diversification Opportunities for BC IRON and EIDESVIK OFFSHORE

0.37

Correlation Coefficient

BC IRON  EIDESVIK OFFSHORE

Weak diversification

The 3 months correlation between BC3 and EIDESVIK is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding BC IRON and EIDESVIK OFFSHORE NK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EIDESVIK OFFSHORE and BC IRON 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 BC IRON 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 BC IRON i.e., BC IRON and EIDESVIK OFFSHORE go up and down completely randomly.

Pair Corralation between BC IRON and EIDESVIK OFFSHORE

Assuming the 90 days trading horizon BC IRON is expected to generate 3.58 times less return on investment than EIDESVIK OFFSHORE. But when comparing it to its historical volatility, BC IRON is 1.19 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  110.00  in EIDESVIK OFFSHORE NK on October 10, 2024 and sell it today you would earn a total of  2.00  from holding EIDESVIK OFFSHORE NK or generate 1.82% return on investment over 90 days.

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

BC IRON  vs.  EIDESVIK OFFSHORE NK

BC IRON

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BC IRON has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

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 BC IRON and EIDESVIK OFFSHORE

The main advantage of trading using opposite BC IRON and EIDESVIK OFFSHORE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BC IRON 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 BC IRON 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.