Correlation Between EIDESVIK OFFSHORE and Perma-Fix Environmental

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

Diversification Opportunities for EIDESVIK OFFSHORE and Perma-Fix Environmental

0.8

Correlation Coefficient

EIDESVIK OFFSHORE  Perma-Fix Environmental

Very poor diversification

The 3 months correlation between EIDESVIK and Perma-Fix is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding EIDESVIK OFFSHORE NK and Perma Fix Environmental Servic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perma Fix Environmental 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 Perma-Fix Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perma Fix Environmental has no effect on the direction of EIDESVIK OFFSHORE i.e., EIDESVIK OFFSHORE and Perma-Fix Environmental go up and down completely randomly.

Pair Corralation between EIDESVIK OFFSHORE and Perma-Fix Environmental

Assuming the 90 days horizon EIDESVIK OFFSHORE NK is expected to generate 0.82 times more return on investment than Perma-Fix Environmental. However, EIDESVIK OFFSHORE NK is 1.21 times less risky than Perma-Fix Environmental. It trades about -0.04 of its potential returns per unit of risk. Perma Fix Environmental Services is currently generating about -0.21 per unit of risk. If you would invest  107.00  in EIDESVIK OFFSHORE NK on December 25, 2024 and sell it today you would lose (8.00) from holding EIDESVIK OFFSHORE NK or give up 7.48% of portfolio value over 90 days.

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

EIDESVIK OFFSHORE NK  vs.  Perma Fix Environmental Servic

EIDESVIK OFFSHORE

Risk-Adjusted Performance

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 current stock price disturbance, may contribute to mid-run losses for the stockholders.

Perma Fix Environmental

Risk-Adjusted Performance

Very Weak

Over the last 90 days Perma Fix Environmental Services has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with EIDESVIK OFFSHORE and Perma-Fix Environmental

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

The idea behind EIDESVIK OFFSHORE NK and Perma Fix Environmental Services 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.