Correlation Between Eidesvik Offshore and AIR PRODCHEMICALS

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

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

Diversification Opportunities for Eidesvik Offshore and AIR PRODCHEMICALS

-0.81

Correlation Coefficient

Eidesvik Offshore  AIR PRODCHEMICALS

Pay attention - limited upside

The 3 months correlation between Eidesvik and AIR is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Eidesvik Offshore ASA and AIR PRODCHEMICALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIR PRODCHEMICALS 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 ASA are associated (or correlated) with AIR PRODCHEMICALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIR PRODCHEMICALS has no effect on the direction of Eidesvik Offshore i.e., Eidesvik Offshore and AIR PRODCHEMICALS go up and down completely randomly.

Pair Corralation between Eidesvik Offshore and AIR PRODCHEMICALS

Assuming the 90 days trading horizon Eidesvik Offshore ASA is expected to under-perform the AIR PRODCHEMICALS. In addition to that, Eidesvik Offshore is 1.49 times more volatile than AIR PRODCHEMICALS. It trades about -0.1 of its total potential returns per unit of risk. AIR PRODCHEMICALS is currently generating about 0.27 per unit of volatility. If you would invest  24,686  in AIR PRODCHEMICALS on September 4, 2024 and sell it today you would earn a total of  6,944  from holding AIR PRODCHEMICALS or generate 28.13% return on investment over 90 days.

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

Eidesvik Offshore ASA  vs.  AIR PRODCHEMICALS

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 uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

AIR PRODCHEMICALS

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AIR PRODCHEMICALS are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, AIR PRODCHEMICALS unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eidesvik Offshore and AIR PRODCHEMICALS

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

The idea behind Eidesvik Offshore ASA and AIR PRODCHEMICALS 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.