Correlation Between Eidesvik Offshore and Amazon

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

Diversification Opportunities for Eidesvik Offshore and Amazon

0.3

Correlation Coefficient

Eidesvik Offshore  Amazon

Weak diversification

The 3 months correlation between Eidesvik and Amazon is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Eidesvik Offshore ASA and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc 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 Amazon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazon Inc has no effect on the direction of Eidesvik Offshore i.e., Eidesvik Offshore and Amazon go up and down completely randomly.

Pair Corralation between Eidesvik Offshore and Amazon

Assuming the 90 days trading horizon Eidesvik Offshore ASA is expected to generate 2.47 times more return on investment than Amazon. However, Eidesvik Offshore is 2.47 times more volatile than Amazon Inc. It trades about 0.21 of its potential returns per unit of risk. Amazon Inc is currently generating about 0.09 per unit of risk. If you would invest  92.00  in Eidesvik Offshore ASA on March 12, 2024 and sell it today you would earn a total of  47.00  from holding Eidesvik Offshore ASA or generate 51.09% return on investment over 90 days.

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

Eidesvik Offshore ASA  vs.  Amazon Inc

Eidesvik Offshore ASA

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Eidesvik Offshore ASA are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Eidesvik Offshore unveiled solid returns over the last few months and may actually be approaching a breakup point.

Amazon Inc

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Amazon Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Amazon may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Pair Trading with Eidesvik Offshore and Amazon

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

The idea behind Eidesvik Offshore ASA and Amazon Inc 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.

Check out your portfolio center.

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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.