Correlation Between CSSC Offshore and Eidesvik Offshore

Can any of the company-specific risk be diversified away by investing in both CSSC Offshore and Eidesvik 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 CSSC Offshore and Eidesvik Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CSSC Offshore Marine and Eidesvik Offshore ASA, you can compare the effects of market volatilities on CSSC Offshore and Eidesvik 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 CSSC Offshore with a short position of Eidesvik Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of CSSC Offshore and Eidesvik Offshore.

Diversification Opportunities for CSSC Offshore and Eidesvik Offshore

0.09

Correlation Coefficient

CSSC Offshore  Eidesvik Offshore

Significant diversification

The 3 months correlation between CSSC and Eidesvik is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding CSSC Offshore Marine and Eidesvik Offshore ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eidesvik Offshore ASA and CSSC 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 CSSC Offshore Marine are associated (or correlated) with Eidesvik Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eidesvik Offshore ASA has no effect on the direction of CSSC Offshore i.e., CSSC Offshore and Eidesvik Offshore go up and down completely randomly.

Pair Corralation between CSSC Offshore and Eidesvik Offshore

Assuming the 90 days trading horizon CSSC Offshore Marine is expected to generate 0.74 times more return on investment than Eidesvik Offshore. However, CSSC Offshore Marine is 1.35 times less risky than Eidesvik Offshore. It trades about -0.01 of its potential returns per unit of risk. Eidesvik Offshore ASA is currently generating about -0.03 per unit of risk. If you would invest  124.00  in CSSC Offshore Marine on November 29, 2024 and sell it today you would lose (2.00) from holding CSSC Offshore Marine or give up 1.61% of portfolio value over 90 days.

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

CSSC Offshore Marine  vs.  Eidesvik Offshore ASA

CSSC Offshore Marine

Risk-Adjusted Performance

Weak

Over the last 90 days CSSC Offshore Marine has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, CSSC Offshore is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

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 comparatively stable basic indicators, Eidesvik Offshore is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with CSSC Offshore and Eidesvik Offshore

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

The idea behind CSSC Offshore Marine and Eidesvik Offshore 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.