Correlation Between EIDESVIK OFFSHORE and TTM Technologies

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

Diversification Opportunities for EIDESVIK OFFSHORE and TTM Technologies

0.83

Correlation Coefficient

EIDESVIK OFFSHORE  TTM Technologies

Very poor diversification

The 3 months correlation between EIDESVIK and TTM is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding EIDESVIK OFFSHORE NK and TTM Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TTM Technologies 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 TTM Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TTM Technologies has no effect on the direction of EIDESVIK OFFSHORE i.e., EIDESVIK OFFSHORE and TTM Technologies go up and down completely randomly.

Pair Corralation between EIDESVIK OFFSHORE and TTM Technologies

Assuming the 90 days horizon EIDESVIK OFFSHORE NK is expected to generate 0.78 times more return on investment than TTM Technologies. However, EIDESVIK OFFSHORE NK is 1.28 times less risky than TTM Technologies. It trades about -0.05 of its potential returns per unit of risk. TTM Technologies is currently generating about -0.06 per unit of risk. If you would invest  108.00  in EIDESVIK OFFSHORE NK on December 21, 2024 and sell it today you would lose (10.00) from holding EIDESVIK OFFSHORE NK or give up 9.26% 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.  TTM Technologies

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 latest unsteady 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.

TTM Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days TTM Technologies 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 TTM Technologies

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

The idea behind EIDESVIK OFFSHORE NK and TTM Technologies 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.