Correlation Between EIDESVIK OFFSHORE and TRAVEL LEISURE

Can any of the company-specific risk be diversified away by investing in both EIDESVIK OFFSHORE and TRAVEL LEISURE 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 TRAVEL LEISURE 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 TRAVEL LEISURE DL 01, you can compare the effects of market volatilities on EIDESVIK OFFSHORE and TRAVEL LEISURE 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 TRAVEL LEISURE. Check out your portfolio center. Please also check ongoing floating volatility patterns of EIDESVIK OFFSHORE and TRAVEL LEISURE.

Diversification Opportunities for EIDESVIK OFFSHORE and TRAVEL LEISURE

-0.76

Correlation Coefficient

EIDESVIK OFFSHORE  TRAVEL LEISURE

Pay attention - limited upside

The 3 months correlation between EIDESVIK and TRAVEL is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding EIDESVIK OFFSHORE NK and TRAVEL LEISURE DL 01 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRAVEL LEISURE DL 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 TRAVEL LEISURE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRAVEL LEISURE DL has no effect on the direction of EIDESVIK OFFSHORE i.e., EIDESVIK OFFSHORE and TRAVEL LEISURE go up and down completely randomly.

Pair Corralation between EIDESVIK OFFSHORE and TRAVEL LEISURE

Assuming the 90 days horizon EIDESVIK OFFSHORE NK is expected to generate 2.56 times more return on investment than TRAVEL LEISURE. However, EIDESVIK OFFSHORE is 2.56 times more volatile than TRAVEL LEISURE DL 01. It trades about -0.02 of its potential returns per unit of risk. TRAVEL LEISURE DL 01 is currently generating about -0.14 per unit of risk. If you would invest  112.00  in EIDESVIK OFFSHORE NK on September 23, 2024 and sell it today you would lose (3.00) from holding EIDESVIK OFFSHORE NK or give up 2.68% of portfolio value over 90 days.

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

EIDESVIK OFFSHORE NK  vs.  TRAVEL LEISURE DL 01

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.

TRAVEL LEISURE DL

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TRAVEL LEISURE DL 01 are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, TRAVEL LEISURE reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EIDESVIK OFFSHORE and TRAVEL LEISURE

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

The idea behind EIDESVIK OFFSHORE NK and TRAVEL LEISURE DL 01 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.