Correlation Between Eidesvik Offshore and Wilh Wilhelmsen

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

Diversification Opportunities for Eidesvik Offshore and Wilh Wilhelmsen

0.73

Correlation Coefficient

Eidesvik Offshore  Wilh Wilhelmsen

Poor diversification

The 3 months correlation between Eidesvik and Wilh is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Eidesvik Offshore ASA and Wilh Wilhelmsen Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilh Wilhelmsen Holding 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 Wilh Wilhelmsen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wilh Wilhelmsen Holding has no effect on the direction of Eidesvik Offshore i.e., Eidesvik Offshore and Wilh Wilhelmsen go up and down completely randomly.

Pair Corralation between Eidesvik Offshore and Wilh Wilhelmsen

Assuming the 90 days trading horizon Eidesvik Offshore ASA is expected to generate 1.23 times more return on investment than Wilh Wilhelmsen. However, Eidesvik Offshore is 1.23 times more volatile than Wilh Wilhelmsen Holding. It trades about -0.06 of its potential returns per unit of risk. Wilh Wilhelmsen Holding is currently generating about -0.1 per unit of risk. If you would invest  1,474  in Eidesvik Offshore ASA on September 19, 2024 and sell it today you would lose (128.00) from holding Eidesvik Offshore ASA or give up 8.68% of portfolio value over 90 days.

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

Eidesvik Offshore ASA  vs.  Wilh Wilhelmsen Holding

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. 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.

Wilh Wilhelmsen Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wilh Wilhelmsen Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward 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 Eidesvik Offshore and Wilh Wilhelmsen

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

The idea behind Eidesvik Offshore ASA and Wilh Wilhelmsen Holding 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.