Correlation Between Eidesvik Offshore and TMBThanachart Bank

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

Diversification Opportunities for Eidesvik Offshore and TMBThanachart Bank

0.85

Correlation Coefficient

Eidesvik Offshore  TMBThanachart Bank

Very poor diversification

The 3 months correlation between Eidesvik and TMBThanachart is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Eidesvik Offshore ASA and TMBThanachart Bank Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TMBThanachart Bank Public 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 TMBThanachart Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TMBThanachart Bank Public has no effect on the direction of Eidesvik Offshore i.e., Eidesvik Offshore and TMBThanachart Bank go up and down completely randomly.

Pair Corralation between Eidesvik Offshore and TMBThanachart Bank

Assuming the 90 days trading horizon Eidesvik Offshore ASA is expected to under-perform the TMBThanachart Bank. In addition to that, Eidesvik Offshore is 1.62 times more volatile than TMBThanachart Bank Public. It trades about -0.08 of its total potential returns per unit of risk. TMBThanachart Bank Public is currently generating about -0.07 per unit of volatility. If you would invest  5.10  in TMBThanachart Bank Public on September 7, 2024 and sell it today you would lose (0.35) from holding TMBThanachart Bank Public or give up 6.86% 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.  TMBThanachart Bank Public

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 latest fragile 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.

TMBThanachart Bank Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TMBThanachart Bank Public 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 TMBThanachart Bank

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

The idea behind Eidesvik Offshore ASA and TMBThanachart Bank Public 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.