Correlation Between Eidesvik Offshore and 2020 Bulkers

Can any of the company-specific risk be diversified away by investing in both Eidesvik Offshore and 2020 Bulkers 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 2020 Bulkers 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 2020 Bulkers, you can compare the effects of market volatilities on Eidesvik Offshore and 2020 Bulkers 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 2020 Bulkers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eidesvik Offshore and 2020 Bulkers.

Diversification Opportunities for Eidesvik Offshore and 2020 Bulkers

0.25

Correlation Coefficient

Eidesvik Offshore  2020 Bulkers

Modest diversification

The 3 months correlation between Eidesvik and 2020 is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Eidesvik Offshore ASA and 2020 Bulkers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 2020 Bulkers 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 2020 Bulkers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 2020 Bulkers has no effect on the direction of Eidesvik Offshore i.e., Eidesvik Offshore and 2020 Bulkers go up and down completely randomly.

Pair Corralation between Eidesvik Offshore and 2020 Bulkers

Assuming the 90 days trading horizon Eidesvik Offshore ASA is expected to under-perform the 2020 Bulkers. But the stock apears to be less risky and, when comparing its historical volatility, Eidesvik Offshore ASA is 1.17 times less risky than 2020 Bulkers. The stock trades about -0.11 of its potential returns per unit of risk. The 2020 Bulkers is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  13,520  in 2020 Bulkers on December 31, 2024 and sell it today you would lose (1,770) from holding 2020 Bulkers or give up 13.09% of portfolio value over 90 days.

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

Eidesvik Offshore ASA  vs.  2020 Bulkers

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. Despite conflicting performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in May 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

2020 Bulkers

Risk-Adjusted Performance

Very Weak

Over the last 90 days 2020 Bulkers has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's essential indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Eidesvik Offshore and 2020 Bulkers

The main advantage of trading using opposite Eidesvik Offshore and 2020 Bulkers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eidesvik Offshore position performs unexpectedly, 2020 Bulkers 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 2020 Bulkers will offset losses from the drop in 2020 Bulkers' long position.

The idea behind Eidesvik Offshore ASA and 2020 Bulkers 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.