Correlation Between Eidesvik Offshore and NORWEGIAN AIR

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

Diversification Opportunities for Eidesvik Offshore and NORWEGIAN AIR

-0.44

Correlation Coefficient

Eidesvik Offshore  NORWEGIAN AIR

Very good diversification

The 3 months correlation between Eidesvik and NORWEGIAN is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Eidesvik Offshore ASA and NORWEGIAN AIR SHUT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NORWEGIAN AIR SHUT 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 NORWEGIAN AIR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NORWEGIAN AIR SHUT has no effect on the direction of Eidesvik Offshore i.e., Eidesvik Offshore and NORWEGIAN AIR go up and down completely randomly.

Pair Corralation between Eidesvik Offshore and NORWEGIAN AIR

Assuming the 90 days trading horizon Eidesvik Offshore ASA is expected to under-perform the NORWEGIAN AIR. But the stock apears to be less risky and, when comparing its historical volatility, Eidesvik Offshore ASA is 1.18 times less risky than NORWEGIAN AIR. The stock trades about -0.05 of its potential returns per unit of risk. The NORWEGIAN AIR SHUT is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  93.00  in NORWEGIAN AIR SHUT on December 24, 2024 and sell it today you would earn a total of  8.00  from holding NORWEGIAN AIR SHUT or generate 8.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Eidesvik Offshore ASA  vs.  NORWEGIAN AIR SHUT

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 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.

NORWEGIAN AIR SHUT

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NORWEGIAN AIR SHUT are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, NORWEGIAN AIR may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Eidesvik Offshore and NORWEGIAN AIR

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

The idea behind Eidesvik Offshore ASA and NORWEGIAN AIR SHUT 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.