Correlation Between EIDESVIK OFFSHORE and PennantPark Investment

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

By analyzing existing cross correlation between EIDESVIK OFFSHORE NK and PennantPark Investment, you can compare the effects of market volatilities on EIDESVIK OFFSHORE and PennantPark Investment 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 EIDESVIK OFFSHORE with a short position of PennantPark Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of EIDESVIK OFFSHORE and PennantPark Investment.

Diversification Opportunities for EIDESVIK OFFSHORE and PennantPark Investment

-0.66

Correlation Coefficient

EIDESVIK OFFSHORE  PennantPark Investment

Excellent diversification

The 3 months correlation between EIDESVIK and PennantPark is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding EIDESVIK OFFSHORE NK and PennantPark Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennantPark Investment and EIDESVIK 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 EIDESVIK OFFSHORE NK are associated (or correlated) with PennantPark Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PennantPark Investment has no effect on the direction of EIDESVIK OFFSHORE i.e., EIDESVIK OFFSHORE and PennantPark Investment go up and down completely randomly.

Pair Corralation between EIDESVIK OFFSHORE and PennantPark Investment

Assuming the 90 days horizon EIDESVIK OFFSHORE NK is expected to under-perform the PennantPark Investment. In addition to that, EIDESVIK OFFSHORE is 1.6 times more volatile than PennantPark Investment. It trades about -0.06 of its total potential returns per unit of risk. PennantPark Investment is currently generating about 0.07 per unit of volatility. If you would invest  610.00  in PennantPark Investment on September 15, 2024 and sell it today you would earn a total of  40.00  from holding PennantPark Investment or generate 6.56% return on investment over 90 days.

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

EIDESVIK OFFSHORE NK  vs.  PennantPark Investment

EIDESVIK OFFSHORE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EIDESVIK OFFSHORE NK has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

PennantPark Investment

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PennantPark Investment are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, PennantPark Investment may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with EIDESVIK OFFSHORE and PennantPark Investment

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

The idea behind EIDESVIK OFFSHORE NK and PennantPark Investment 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.