Correlation Between Eidesvik Offshore and FUJITSU

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

Diversification Opportunities for Eidesvik Offshore and FUJITSU

0.42

Correlation Coefficient

Eidesvik Offshore  FUJITSU

Very weak diversification

The 3 months correlation between Eidesvik and FUJITSU is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Eidesvik Offshore ASA and FUJITSU LTD ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FUJITSU LTD ADR 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 FUJITSU. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FUJITSU LTD ADR has no effect on the direction of Eidesvik Offshore i.e., Eidesvik Offshore and FUJITSU go up and down completely randomly.

Pair Corralation between Eidesvik Offshore and FUJITSU

Assuming the 90 days trading horizon Eidesvik Offshore ASA is expected to under-perform the FUJITSU. In addition to that, Eidesvik Offshore is 1.09 times more volatile than FUJITSU LTD ADR. It trades about -0.1 of its total potential returns per unit of risk. FUJITSU LTD ADR is currently generating about 0.05 per unit of volatility. If you would invest  1,700  in FUJITSU LTD ADR on September 4, 2024 and sell it today you would earn a total of  80.00  from holding FUJITSU LTD ADR or generate 4.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Eidesvik Offshore ASA  vs.  FUJITSU LTD ADR

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 uncertain 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.

FUJITSU LTD ADR

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in FUJITSU LTD ADR are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward-looking indicators, FUJITSU is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Eidesvik Offshore and FUJITSU

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

The idea behind Eidesvik Offshore ASA and FUJITSU LTD ADR 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.