Correlation Between Eidesvik Offshore and Grieg Seafood

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

Diversification Opportunities for Eidesvik Offshore and Grieg Seafood

-0.62

Correlation Coefficient

Eidesvik Offshore  Grieg Seafood

Excellent diversification

The 3 months correlation between Eidesvik and Grieg is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Eidesvik Offshore ASA and Grieg Seafood ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grieg Seafood ASA 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 Grieg Seafood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grieg Seafood ASA has no effect on the direction of Eidesvik Offshore i.e., Eidesvik Offshore and Grieg Seafood go up and down completely randomly.

Pair Corralation between Eidesvik Offshore and Grieg Seafood

Assuming the 90 days trading horizon Eidesvik Offshore ASA is expected to under-perform the Grieg Seafood. But the stock apears to be less risky and, when comparing its historical volatility, Eidesvik Offshore ASA is 1.13 times less risky than Grieg Seafood. The stock trades about -0.1 of its potential returns per unit of risk. The Grieg Seafood ASA is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  5,725  in Grieg Seafood ASA on September 16, 2024 and sell it today you would earn a total of  840.00  from holding Grieg Seafood ASA or generate 14.67% return on investment over 90 days.

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

Eidesvik Offshore ASA  vs.  Grieg Seafood ASA

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 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.

Grieg Seafood ASA

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Grieg Seafood ASA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting technical and fundamental indicators, Grieg Seafood disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eidesvik Offshore and Grieg Seafood

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

The idea behind Eidesvik Offshore ASA and Grieg Seafood ASA 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.