Correlation Between Eidesvik Offshore and Cloudberry Clean

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

Diversification Opportunities for Eidesvik Offshore and Cloudberry Clean

0.69

Correlation Coefficient

Eidesvik Offshore  Cloudberry Clean

Poor diversification

The 3 months correlation between Eidesvik and Cloudberry is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Eidesvik Offshore ASA and Cloudberry Clean Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cloudberry Clean Energy 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 Cloudberry Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cloudberry Clean Energy has no effect on the direction of Eidesvik Offshore i.e., Eidesvik Offshore and Cloudberry Clean go up and down completely randomly.

Pair Corralation between Eidesvik Offshore and Cloudberry Clean

Assuming the 90 days trading horizon Eidesvik Offshore ASA is expected to under-perform the Cloudberry Clean. In addition to that, Eidesvik Offshore is 1.0 times more volatile than Cloudberry Clean Energy. It trades about -0.12 of its total potential returns per unit of risk. Cloudberry Clean Energy is currently generating about -0.08 per unit of volatility. If you would invest  1,328  in Cloudberry Clean Energy on August 31, 2024 and sell it today you would lose (142.00) from holding Cloudberry Clean Energy or give up 10.69% of portfolio value over 90 days.

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

Eidesvik Offshore ASA  vs.  Cloudberry Clean Energy

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. Despite conflicting performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in December 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Cloudberry Clean Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cloudberry Clean Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Eidesvik Offshore and Cloudberry Clean

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

The idea behind Eidesvik Offshore ASA and Cloudberry Clean Energy 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.