Correlation Between Eidesvik Offshore and Atea ASA

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

Diversification Opportunities for Eidesvik Offshore and Atea ASA

0.5

Correlation Coefficient

Eidesvik Offshore  Atea ASA

Very weak diversification

The 3 months correlation between Eidesvik and Atea is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Eidesvik Offshore ASA and Atea ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atea ASA 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 Atea ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atea ASA has no effect on the direction of Eidesvik Offshore i.e., Eidesvik Offshore and Atea ASA go up and down completely randomly.

Pair Corralation between Eidesvik Offshore and Atea ASA

Assuming the 90 days trading horizon Eidesvik Offshore ASA is expected to under-perform the Atea ASA. In addition to that, Eidesvik Offshore is 1.61 times more volatile than Atea ASA. It trades about -0.04 of its total potential returns per unit of risk. Atea ASA is currently generating about -0.02 per unit of volatility. If you would invest  1,164  in Atea ASA on December 22, 2024 and sell it today you would lose (26.00) from holding Atea ASA or give up 2.23% of portfolio value over 90 days.

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

Eidesvik Offshore ASA  vs.  Atea ASA

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 comparatively stable basic indicators, Eidesvik Offshore is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Atea ASA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Atea ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Atea ASA is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Eidesvik Offshore and Atea ASA

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

The idea behind Eidesvik Offshore ASA and Atea ASA 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.

Check out your portfolio center.

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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.