Correlation Between Eidesvik Offshore and Jacquet Metal

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

Diversification Opportunities for Eidesvik Offshore and Jacquet Metal

0.01

Correlation Coefficient

Eidesvik Offshore  Jacquet Metal

Significant diversification

The 3 months correlation between Eidesvik and Jacquet is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Eidesvik Offshore ASA and Jacquet Metal Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jacquet Metal Service 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 Jacquet Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jacquet Metal Service has no effect on the direction of Eidesvik Offshore i.e., Eidesvik Offshore and Jacquet Metal go up and down completely randomly.

Pair Corralation between Eidesvik Offshore and Jacquet Metal

Assuming the 90 days trading horizon Eidesvik Offshore ASA is expected to generate 1.28 times more return on investment than Jacquet Metal. However, Eidesvik Offshore is 1.28 times more volatile than Jacquet Metal Service. It trades about 0.01 of its potential returns per unit of risk. Jacquet Metal Service is currently generating about -0.32 per unit of risk. If you would invest  111.00  in Eidesvik Offshore ASA on October 26, 2024 and sell it today you would earn a total of  0.00  from holding Eidesvik Offshore ASA or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

Eidesvik Offshore ASA  vs.  Jacquet Metal Service

Eidesvik Offshore ASA

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eidesvik Offshore ASA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Eidesvik Offshore is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Jacquet Metal Service

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jacquet Metal Service 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.

Pair Trading with Eidesvik Offshore and Jacquet Metal

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

The idea behind Eidesvik Offshore ASA and Jacquet Metal Service 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.