Correlation Between EIDESVIK OFFSHORE and PENINSULA ENERG

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

Diversification Opportunities for EIDESVIK OFFSHORE and PENINSULA ENERG

0.55

Correlation Coefficient

EIDESVIK OFFSHORE  PENINSULA ENERG

Very weak diversification

The 3 months correlation between EIDESVIK and PENINSULA is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding EIDESVIK OFFSHORE NK and PENINSULA ENERG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PENINSULA ENERG 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 PENINSULA ENERG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PENINSULA ENERG has no effect on the direction of EIDESVIK OFFSHORE i.e., EIDESVIK OFFSHORE and PENINSULA ENERG go up and down completely randomly.

Pair Corralation between EIDESVIK OFFSHORE and PENINSULA ENERG

Assuming the 90 days horizon EIDESVIK OFFSHORE is expected to generate 12.6 times less return on investment than PENINSULA ENERG. But when comparing it to its historical volatility, EIDESVIK OFFSHORE NK is 13.8 times less risky than PENINSULA ENERG. It trades about 0.04 of its potential returns per unit of risk. PENINSULA ENERG is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  185.00  in PENINSULA ENERG on October 4, 2024 and sell it today you would lose (106.00) from holding PENINSULA ENERG or give up 57.3% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

EIDESVIK OFFSHORE NK  vs.  PENINSULA ENERG

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 latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

PENINSULA ENERG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PENINSULA ENERG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with EIDESVIK OFFSHORE and PENINSULA ENERG

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

The idea behind EIDESVIK OFFSHORE NK and PENINSULA ENERG 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.