Correlation Between Eidesvik Offshore and PPG Industries

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

Diversification Opportunities for Eidesvik Offshore and PPG Industries

-0.07

Correlation Coefficient

Eidesvik Offshore  PPG Industries

Good diversification

The 3 months correlation between Eidesvik and PPG is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Eidesvik Offshore ASA and PPG Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PPG Industries 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 PPG Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PPG Industries has no effect on the direction of Eidesvik Offshore i.e., Eidesvik Offshore and PPG Industries go up and down completely randomly.

Pair Corralation between Eidesvik Offshore and PPG Industries

Assuming the 90 days trading horizon Eidesvik Offshore ASA is expected to generate 2.26 times more return on investment than PPG Industries. However, Eidesvik Offshore is 2.26 times more volatile than PPG Industries. It trades about 0.05 of its potential returns per unit of risk. PPG Industries is currently generating about 0.11 per unit of risk. If you would invest  108.00  in Eidesvik Offshore ASA on October 24, 2024 and sell it today you would earn a total of  2.00  from holding Eidesvik Offshore ASA or generate 1.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.44%
Values	Daily Returns

Eidesvik Offshore ASA  vs.  PPG Industries

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.

PPG Industries

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PPG Industries are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, PPG Industries is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Eidesvik Offshore and PPG Industries

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

The idea behind Eidesvik Offshore ASA and PPG Industries 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.