Correlation Between Sea1 Offshore and Elmera Group

Can any of the company-specific risk be diversified away by investing in both Sea1 Offshore and Elmera Group 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 Sea1 Offshore and Elmera Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sea1 Offshore and Elmera Group ASA, you can compare the effects of market volatilities on Sea1 Offshore and Elmera Group 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 Sea1 Offshore with a short position of Elmera Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sea1 Offshore and Elmera Group.

Diversification Opportunities for Sea1 Offshore and Elmera Group

0.11

Correlation Coefficient

Sea1 Offshore  Elmera Group

Average diversification

The 3 months correlation between Sea1 and Elmera is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Sea1 Offshore and Elmera Group ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elmera Group ASA and Sea1 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 Sea1 Offshore are associated (or correlated) with Elmera Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elmera Group ASA has no effect on the direction of Sea1 Offshore i.e., Sea1 Offshore and Elmera Group go up and down completely randomly.

Pair Corralation between Sea1 Offshore and Elmera Group

Assuming the 90 days trading horizon Sea1 Offshore is expected to generate 11.92 times less return on investment than Elmera Group. In addition to that, Sea1 Offshore is 1.27 times more volatile than Elmera Group ASA. It trades about 0.01 of its total potential returns per unit of risk. Elmera Group ASA is currently generating about 0.18 per unit of volatility. If you would invest  3,235  in Elmera Group ASA on September 5, 2024 and sell it today you would earn a total of  735.00  from holding Elmera Group ASA or generate 22.72% return on investment over 90 days.

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

Sea1 Offshore  vs.  Elmera Group ASA

Sea1 Offshore

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Sea1 Offshore has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Sea1 Offshore is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Elmera Group ASA

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Elmera Group ASA are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Elmera Group displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sea1 Offshore and Elmera Group

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

The idea behind Sea1 Offshore and Elmera Group 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.