Correlation Between EIDESVIK OFFSHORE and AEON STORES

Can any of the company-specific risk be diversified away by investing in both EIDESVIK OFFSHORE and AEON STORES 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 AEON STORES 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 AEON STORES, you can compare the effects of market volatilities on EIDESVIK OFFSHORE and AEON STORES 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 AEON STORES. Check out your portfolio center. Please also check ongoing floating volatility patterns of EIDESVIK OFFSHORE and AEON STORES.

Diversification Opportunities for EIDESVIK OFFSHORE and AEON STORES

0.27

Correlation Coefficient

EIDESVIK OFFSHORE  AEON STORES

Modest diversification

The 3 months correlation between EIDESVIK and AEON is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding EIDESVIK OFFSHORE NK and AEON STORES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AEON STORES 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 AEON STORES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AEON STORES has no effect on the direction of EIDESVIK OFFSHORE i.e., EIDESVIK OFFSHORE and AEON STORES go up and down completely randomly.

Pair Corralation between EIDESVIK OFFSHORE and AEON STORES

Assuming the 90 days horizon EIDESVIK OFFSHORE NK is expected to under-perform the AEON STORES. In addition to that, EIDESVIK OFFSHORE is 25.9 times more volatile than AEON STORES. It trades about -0.06 of its total potential returns per unit of risk. AEON STORES is currently generating about -0.12 per unit of volatility. If you would invest  6.10  in AEON STORES on September 15, 2024 and sell it today you would lose (0.05) from holding AEON STORES or give up 0.82% of portfolio value over 90 days.

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

EIDESVIK OFFSHORE NK  vs.  AEON STORES

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.

AEON STORES

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AEON STORES has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, AEON STORES is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with EIDESVIK OFFSHORE and AEON STORES

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

The idea behind EIDESVIK OFFSHORE NK and AEON STORES 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 Anywhere module to track or share privately all of your investments from the convenience of any device.