Correlation Between EIDESVIK OFFSHORE and Sibanye Stillwater

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

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

Diversification Opportunities for EIDESVIK OFFSHORE and Sibanye Stillwater

0.09

Correlation Coefficient

EIDESVIK OFFSHORE  Sibanye Stillwater

Significant diversification

The 3 months correlation between EIDESVIK and Sibanye is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding EIDESVIK OFFSHORE NK and Sibanye Stillwater Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sibanye Stillwater and EIDESVIK OFFSHORE 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 EIDESVIK OFFSHORE NK are associated (or correlated) with Sibanye Stillwater. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sibanye Stillwater has no effect on the direction of EIDESVIK OFFSHORE i.e., EIDESVIK OFFSHORE and Sibanye Stillwater go up and down completely randomly.

Pair Corralation between EIDESVIK OFFSHORE and Sibanye Stillwater

Assuming the 90 days horizon EIDESVIK OFFSHORE NK is expected to generate 0.65 times more return on investment than Sibanye Stillwater. However, EIDESVIK OFFSHORE NK is 1.53 times less risky than Sibanye Stillwater. It trades about 0.04 of its potential returns per unit of risk. Sibanye Stillwater Limited is currently generating about 0.0 per unit of risk. 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

EIDESVIK OFFSHORE NK  vs.  Sibanye Stillwater Limited

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.

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.

Pair Trading with EIDESVIK OFFSHORE and Sibanye Stillwater

The main advantage of trading using opposite EIDESVIK OFFSHORE and Sibanye Stillwater positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EIDESVIK OFFSHORE position performs unexpectedly, Sibanye Stillwater 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 Sibanye Stillwater will offset losses from the drop in Sibanye Stillwater's long position.

The idea behind EIDESVIK OFFSHORE NK and Sibanye Stillwater Limited 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 Commodity Directory module to find actively traded commodities issued by global exchanges.