Correlation Between Eidesvik Offshore and Sea1 Offshore

Can any of the company-specific risk be diversified away by investing in both Eidesvik Offshore and Sea1 Offshore 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 Sea1 Offshore 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 Sea1 Offshore, you can compare the effects of market volatilities on Eidesvik Offshore and Sea1 Offshore 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 Sea1 Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eidesvik Offshore and Sea1 Offshore.

Diversification Opportunities for Eidesvik Offshore and Sea1 Offshore

0.39

Correlation Coefficient

Eidesvik Offshore  Sea1 Offshore

Weak diversification

The 3 months correlation between Eidesvik and Sea1 is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Eidesvik Offshore ASA and Sea1 Offshore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sea1 Offshore 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 Sea1 Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sea1 Offshore has no effect on the direction of Eidesvik Offshore i.e., Eidesvik Offshore and Sea1 Offshore go up and down completely randomly.

Pair Corralation between Eidesvik Offshore and Sea1 Offshore

Assuming the 90 days trading horizon Eidesvik Offshore ASA is expected to under-perform the Sea1 Offshore. But the stock apears to be less risky and, when comparing its historical volatility, Eidesvik Offshore ASA is 1.12 times less risky than Sea1 Offshore. The stock trades about -0.09 of its potential returns per unit of risk. The Sea1 Offshore is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  2,865  in Sea1 Offshore on September 13, 2024 and sell it today you would lose (275.00) from holding Sea1 Offshore or give up 9.6% 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.  Sea1 Offshore

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.

Sea1 Offshore

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sea1 Offshore 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 Sea1 Offshore

The main advantage of trading using opposite Eidesvik Offshore and Sea1 Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eidesvik Offshore position performs unexpectedly, Sea1 Offshore 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 Sea1 Offshore will offset losses from the drop in Sea1 Offshore's long position.

The idea behind Eidesvik Offshore ASA and Sea1 Offshore 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.