Correlation Between Eidesvik Offshore and BOOM LOGISTICS

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

Diversification Opportunities for Eidesvik Offshore and BOOM LOGISTICS

-0.48

Correlation Coefficient

Eidesvik Offshore  BOOM LOGISTICS

Very good diversification

The 3 months correlation between Eidesvik and BOOM is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Eidesvik Offshore ASA and BOOM LOGISTICS LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BOOM LOGISTICS LTD 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 BOOM LOGISTICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BOOM LOGISTICS LTD has no effect on the direction of Eidesvik Offshore i.e., Eidesvik Offshore and BOOM LOGISTICS go up and down completely randomly.

Pair Corralation between Eidesvik Offshore and BOOM LOGISTICS

Assuming the 90 days trading horizon Eidesvik Offshore ASA is expected to under-perform the BOOM LOGISTICS. But the stock apears to be less risky and, when comparing its historical volatility, Eidesvik Offshore ASA is 1.15 times less risky than BOOM LOGISTICS. The stock trades about -0.04 of its potential returns per unit of risk. The BOOM LOGISTICS LTD is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  82.00  in BOOM LOGISTICS LTD on December 21, 2024 and sell it today you would earn a total of  3.00  from holding BOOM LOGISTICS LTD or generate 3.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Eidesvik Offshore ASA  vs.  BOOM LOGISTICS LTD

Eidesvik Offshore ASA

Risk-Adjusted Performance

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 latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

BOOM LOGISTICS LTD

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BOOM LOGISTICS LTD are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, BOOM LOGISTICS 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 BOOM LOGISTICS

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

The idea behind Eidesvik Offshore ASA and BOOM LOGISTICS LTD 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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .