Correlation Between Eidesvik Offshore and Société Générale

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

Diversification Opportunities for Eidesvik Offshore and Société Générale

-0.8

Correlation Coefficient

Eidesvik Offshore  Société Générale

Pay attention - limited upside

The 3 months correlation between Eidesvik and Société is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Eidesvik Offshore ASA and Socit Gnrale Socit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Socit Gnrale Socit 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 Société Générale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Socit Gnrale Socit has no effect on the direction of Eidesvik Offshore i.e., Eidesvik Offshore and Société Générale go up and down completely randomly.

Pair Corralation between Eidesvik Offshore and Société Générale

Assuming the 90 days trading horizon Eidesvik Offshore ASA is expected to under-perform the Société Générale. But the stock apears to be less risky and, when comparing its historical volatility, Eidesvik Offshore ASA is 1.07 times less risky than Société Générale. The stock trades about -0.03 of its potential returns per unit of risk. The Socit Gnrale Socit is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  2,276  in Socit Gnrale Socit on October 8, 2024 and sell it today you would earn a total of  459.00  from holding Socit Gnrale Socit or generate 20.17% return on investment over 90 days.

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

Eidesvik Offshore ASA  vs.  Socit Gnrale Socit

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.

Socit Gnrale Socit

Risk-Adjusted Performance

12 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Socit Gnrale Socit are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Société Générale unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eidesvik Offshore and Société Générale

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

The idea behind Eidesvik Offshore ASA and Socit Gnrale Socit 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 Stocks Directory module to find actively traded stocks across global markets.