Correlation Between Nordic Mining and Eidesvik Offshore

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

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

Diversification Opportunities for Nordic Mining and Eidesvik Offshore

-0.01

Correlation Coefficient

Nordic Mining  Eidesvik Offshore

Good diversification

The 3 months correlation between Nordic and Eidesvik is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Nordic Mining 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 Nordic Mining 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 Nordic Mining 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 Nordic Mining i.e., Nordic Mining and Eidesvik Offshore go up and down completely randomly.

Pair Corralation between Nordic Mining and Eidesvik Offshore

Assuming the 90 days trading horizon Nordic Mining ASA is expected to generate 1.2 times more return on investment than Eidesvik Offshore. However, Nordic Mining is 1.2 times more volatile than Eidesvik Offshore ASA. It trades about 0.07 of its potential returns per unit of risk. Eidesvik Offshore ASA is currently generating about -0.01 per unit of risk. If you would invest  1,388  in Nordic Mining ASA on December 3, 2024 and sell it today you would earn a total of  876.00  from holding Nordic Mining ASA or generate 63.11% return on investment over 90 days.

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

Nordic Mining ASA  vs.  Eidesvik Offshore ASA

Nordic Mining ASA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nordic Mining ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's primary indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company 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 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 Nordic Mining and Eidesvik Offshore

The main advantage of trading using opposite Nordic Mining and Eidesvik Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordic Mining 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 Nordic Mining 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.