Correlation Between EIDESVIK OFFSHORE and Unicharm

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

Diversification Opportunities for EIDESVIK OFFSHORE and Unicharm

0.7

Correlation Coefficient

EIDESVIK OFFSHORE  Unicharm

Poor diversification

The 3 months correlation between EIDESVIK and Unicharm is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding EIDESVIK OFFSHORE NK and Unicharm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unicharm 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 Unicharm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unicharm has no effect on the direction of EIDESVIK OFFSHORE i.e., EIDESVIK OFFSHORE and Unicharm go up and down completely randomly.

Pair Corralation between EIDESVIK OFFSHORE and Unicharm

Assuming the 90 days horizon EIDESVIK OFFSHORE NK is expected to generate 1.41 times more return on investment than Unicharm. However, EIDESVIK OFFSHORE is 1.41 times more volatile than Unicharm. It trades about 0.07 of its potential returns per unit of risk. Unicharm is currently generating about -0.17 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  4.00  from holding EIDESVIK OFFSHORE NK or generate 3.64% return on investment over 90 days.

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

EIDESVIK OFFSHORE NK  vs.  Unicharm

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

Unicharm

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Unicharm 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 February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with EIDESVIK OFFSHORE and Unicharm

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

The idea behind EIDESVIK OFFSHORE NK and Unicharm 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.