Correlation Between Eidesvik Offshore and DOCDATA

Can any of the company-specific risk be diversified away by investing in both Eidesvik Offshore and DOCDATA 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 DOCDATA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Eidesvik Offshore ASA and DOCDATA, you can compare the effects of market volatilities on Eidesvik Offshore and DOCDATA 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 DOCDATA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eidesvik Offshore and DOCDATA.

Diversification Opportunities for Eidesvik Offshore and DOCDATA

0.84

Correlation Coefficient

Eidesvik Offshore  DOCDATA

Very poor diversification

The 3 months correlation between Eidesvik and DOCDATA is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Eidesvik Offshore ASA and DOCDATA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DOCDATA 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 ASA are associated (or correlated) with DOCDATA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DOCDATA has no effect on the direction of Eidesvik Offshore i.e., Eidesvik Offshore and DOCDATA go up and down completely randomly.

Pair Corralation between Eidesvik Offshore and DOCDATA

Assuming the 90 days trading horizon Eidesvik Offshore ASA is expected to generate 0.64 times more return on investment than DOCDATA. However, Eidesvik Offshore ASA is 1.55 times less risky than DOCDATA. It trades about -0.11 of its potential returns per unit of risk. DOCDATA is currently generating about -0.12 per unit of risk. If you would invest  127.00  in Eidesvik Offshore ASA on September 24, 2024 and sell it today you would lose (19.00) from holding Eidesvik Offshore ASA or give up 14.96% of portfolio value over 90 days.

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

Eidesvik Offshore ASA  vs.  DOCDATA

Eidesvik Offshore ASA

Risk-Adjusted Performance

0 of 100

Very Weak

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

DOCDATA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DOCDATA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Eidesvik Offshore and DOCDATA

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

The idea behind Eidesvik Offshore ASA and DOCDATA 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..