Correlation Between EIDESVIK OFFSHORE and Berkshire Hathaway

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

Diversification Opportunities for EIDESVIK OFFSHORE and Berkshire Hathaway

0.17

Correlation Coefficient

EIDESVIK OFFSHORE  Berkshire Hathaway

Average diversification

The 3 months correlation between EIDESVIK and Berkshire is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding EIDESVIK OFFSHORE NK and Berkshire Hathaway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berkshire Hathaway 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 Berkshire Hathaway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Berkshire Hathaway has no effect on the direction of EIDESVIK OFFSHORE i.e., EIDESVIK OFFSHORE and Berkshire Hathaway go up and down completely randomly.

Pair Corralation between EIDESVIK OFFSHORE and Berkshire Hathaway

Assuming the 90 days horizon EIDESVIK OFFSHORE NK is expected to generate 5.26 times more return on investment than Berkshire Hathaway. However, EIDESVIK OFFSHORE is 5.26 times more volatile than Berkshire Hathaway. It trades about 0.05 of its potential returns per unit of risk. Berkshire Hathaway is currently generating about -0.1 per unit of risk. 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	Insignificant
Accuracy	94.44%
Values	Daily Returns

EIDESVIK OFFSHORE NK  vs.  Berkshire Hathaway

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.

Berkshire Hathaway

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Berkshire Hathaway are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Berkshire Hathaway reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EIDESVIK OFFSHORE and Berkshire Hathaway

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

The idea behind EIDESVIK OFFSHORE NK and Berkshire Hathaway 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.