Correlation Between Natural Health and Eidesvik Offshore

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

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

Diversification Opportunities for Natural Health and Eidesvik Offshore

0.14

Correlation Coefficient

Natural Health  Eidesvik Offshore

Average diversification

The 3 months correlation between Natural and Eidesvik is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Natural Health Trends 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 Natural Health 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 Natural Health Trends 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 Natural Health i.e., Natural Health and Eidesvik Offshore go up and down completely randomly.

Pair Corralation between Natural Health and Eidesvik Offshore

Assuming the 90 days trading horizon Natural Health Trends is expected to generate 0.91 times more return on investment than Eidesvik Offshore. However, Natural Health Trends is 1.1 times less risky than Eidesvik Offshore. It trades about 0.03 of its potential returns per unit of risk. Eidesvik Offshore ASA is currently generating about 0.02 per unit of risk. If you would invest  380.00  in Natural Health Trends on October 5, 2024 and sell it today you would earn a total of  60.00  from holding Natural Health Trends or generate 15.79% return on investment over 90 days.

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

Natural Health Trends  vs.  Eidesvik Offshore ASA

Natural Health Trends

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Natural Health Trends has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

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. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Natural Health and Eidesvik Offshore

The main advantage of trading using opposite Natural Health and Eidesvik Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Natural Health 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 Natural Health Trends 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.