Correlation Between EIDESVIK OFFSHORE and USWE SPORTS

Can any of the company-specific risk be diversified away by investing in both EIDESVIK OFFSHORE and USWE SPORTS 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 USWE SPORTS 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 USWE SPORTS AB, you can compare the effects of market volatilities on EIDESVIK OFFSHORE and USWE SPORTS 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 USWE SPORTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of EIDESVIK OFFSHORE and USWE SPORTS.

Diversification Opportunities for EIDESVIK OFFSHORE and USWE SPORTS

-0.75

Correlation Coefficient

EIDESVIK OFFSHORE  USWE SPORTS

Pay attention - limited upside

The 3 months correlation between EIDESVIK and USWE is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding EIDESVIK OFFSHORE NK and USWE SPORTS AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on USWE SPORTS AB 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 USWE SPORTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of USWE SPORTS AB has no effect on the direction of EIDESVIK OFFSHORE i.e., EIDESVIK OFFSHORE and USWE SPORTS go up and down completely randomly.

Pair Corralation between EIDESVIK OFFSHORE and USWE SPORTS

Assuming the 90 days horizon EIDESVIK OFFSHORE NK is expected to under-perform the USWE SPORTS. But the stock apears to be less risky and, when comparing its historical volatility, EIDESVIK OFFSHORE NK is 1.13 times less risky than USWE SPORTS. The stock trades about -0.07 of its potential returns per unit of risk. The USWE SPORTS AB is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  56.00  in USWE SPORTS AB on September 30, 2024 and sell it today you would earn a total of  18.00  from holding USWE SPORTS AB or generate 32.14% return on investment over 90 days.

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

EIDESVIK OFFSHORE NK  vs.  USWE SPORTS AB

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 uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

USWE SPORTS AB

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in USWE SPORTS AB are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, USWE SPORTS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EIDESVIK OFFSHORE and USWE SPORTS

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

The idea behind EIDESVIK OFFSHORE NK and USWE SPORTS AB 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.