Correlation Between Eidesvik Offshore and Toshiba Tec

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

Diversification Opportunities for Eidesvik Offshore and Toshiba Tec

0.54

Correlation Coefficient

Eidesvik Offshore  Toshiba Tec

Very weak diversification

The 3 months correlation between Eidesvik and Toshiba is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Eidesvik Offshore ASA and Toshiba Tec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toshiba Tec 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 Toshiba Tec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Toshiba Tec has no effect on the direction of Eidesvik Offshore i.e., Eidesvik Offshore and Toshiba Tec go up and down completely randomly.

Pair Corralation between Eidesvik Offshore and Toshiba Tec

Assuming the 90 days trading horizon Eidesvik Offshore ASA is expected to generate 1.04 times more return on investment than Toshiba Tec. However, Eidesvik Offshore is 1.04 times more volatile than Toshiba Tec. It trades about -0.05 of its potential returns per unit of risk. Toshiba Tec is currently generating about -0.12 per unit of risk. If you would invest  111.00  in Eidesvik Offshore ASA on December 25, 2024 and sell it today you would lose (9.00) from holding Eidesvik Offshore ASA or give up 8.11% of portfolio value over 90 days.

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

Eidesvik Offshore ASA  vs.  Toshiba Tec

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 weak 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.

Toshiba Tec

Risk-Adjusted Performance

Very Weak

Over the last 90 days Toshiba Tec has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Eidesvik Offshore and Toshiba Tec

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

The idea behind Eidesvik Offshore ASA and Toshiba Tec 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.