Correlation Between Mowi ASA and Eidesvik Offshore

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

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

Diversification Opportunities for Mowi ASA and Eidesvik Offshore

0.31

Correlation Coefficient

Mowi ASA  Eidesvik Offshore

Weak diversification

The 3 months correlation between Mowi and Eidesvik is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Mowi ASA 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 Mowi ASA 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 Mowi ASA 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 Mowi ASA i.e., Mowi ASA and Eidesvik Offshore go up and down completely randomly.

Pair Corralation between Mowi ASA and Eidesvik Offshore

Assuming the 90 days trading horizon Mowi ASA is expected to generate 0.8 times more return on investment than Eidesvik Offshore. However, Mowi ASA is 1.25 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 -0.11 per unit of risk. If you would invest  19,552  in Mowi ASA on December 31, 2024 and sell it today you would lose (242.00) from holding Mowi ASA or give up 1.24% of portfolio value over 90 days.

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

Mowi ASA  vs.  Eidesvik Offshore ASA

Mowi ASA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mowi ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Mowi ASA is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional 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. 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.

Pair Trading with Mowi ASA and Eidesvik Offshore

The main advantage of trading using opposite Mowi ASA and Eidesvik Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mowi ASA 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 Mowi ASA 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.