Correlation Between Stolt Nielsen and Eidesvik Offshore

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

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

Diversification Opportunities for Stolt Nielsen and Eidesvik Offshore

0.9

Correlation Coefficient

Stolt Nielsen  Eidesvik Offshore

Almost no diversification

The 3 months correlation between Stolt and Eidesvik is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Stolt Nielsen Limited and Eidesvik Offshore ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eidesvik Offshore ASA and Stolt Nielsen 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 Stolt Nielsen Limited are associated (or correlated) with Eidesvik Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eidesvik Offshore ASA has no effect on the direction of Stolt Nielsen i.e., Stolt Nielsen and Eidesvik Offshore go up and down completely randomly.

Pair Corralation between Stolt Nielsen and Eidesvik Offshore

Assuming the 90 days trading horizon Stolt Nielsen is expected to generate 1.89 times less return on investment than Eidesvik Offshore. But when comparing it to its historical volatility, Stolt Nielsen Limited is 1.19 times less risky than Eidesvik Offshore. It trades about 0.03 of its potential returns per unit of risk. Eidesvik Offshore ASA is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  887.00  in Eidesvik Offshore ASA on September 20, 2024 and sell it today you would earn a total of  463.00  from holding Eidesvik Offshore ASA or generate 52.2% return on investment over 90 days.

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

Stolt Nielsen Limited  vs.  Eidesvik Offshore ASA

Stolt Nielsen Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stolt Nielsen Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

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.

Pair Trading with Stolt Nielsen and Eidesvik Offshore

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

The idea behind Stolt Nielsen Limited and Eidesvik Offshore 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.