Correlation Between Eidesvik Offshore and Park Aerospace

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

Diversification Opportunities for Eidesvik Offshore and Park Aerospace

-0.33

Correlation Coefficient

Eidesvik Offshore  Park Aerospace

Very good diversification

The 3 months correlation between Eidesvik and Park is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Eidesvik Offshore ASA and Park Aerospace Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Park Aerospace Corp 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 Park Aerospace. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Park Aerospace Corp has no effect on the direction of Eidesvik Offshore i.e., Eidesvik Offshore and Park Aerospace go up and down completely randomly.

Pair Corralation between Eidesvik Offshore and Park Aerospace

Assuming the 90 days trading horizon Eidesvik Offshore is expected to generate 2.7 times less return on investment than Park Aerospace. In addition to that, Eidesvik Offshore is 1.06 times more volatile than Park Aerospace Corp. It trades about 0.05 of its total potential returns per unit of risk. Park Aerospace Corp is currently generating about 0.15 per unit of volatility. If you would invest  1,308  in Park Aerospace Corp on October 24, 2024 and sell it today you would earn a total of  82.00  from holding Park Aerospace Corp or generate 6.27% return on investment over 90 days.

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

Eidesvik Offshore ASA  vs.  Park Aerospace Corp

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 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.

Park Aerospace Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Park Aerospace Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Park Aerospace may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Eidesvik Offshore and Park Aerospace

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

The idea behind Eidesvik Offshore ASA and Park Aerospace Corp 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.