Correlation Between RomReal and Eidesvik Offshore

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

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

Diversification Opportunities for RomReal and Eidesvik Offshore

0.0

Correlation Coefficient

RomReal  Eidesvik Offshore

Pay attention - limited upside

The 3 months correlation between RomReal and Eidesvik is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding RomReal 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 RomReal 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 RomReal 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 RomReal i.e., RomReal and Eidesvik Offshore go up and down completely randomly.

Pair Corralation between RomReal and Eidesvik Offshore

If you would invest  1,586  in Eidesvik Offshore ASA on March 2, 2024 and sell it today you would earn a total of  126.00  from holding Eidesvik Offshore ASA or generate 7.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

RomReal Limited  vs.  Eidesvik Offshore ASA

RomReal Limited

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days RomReal Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent primary indicators, RomReal is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Eidesvik Offshore ASA

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Eidesvik Offshore ASA are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating basic indicators, Eidesvik Offshore disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with RomReal and Eidesvik Offshore

The main advantage of trading using opposite RomReal and Eidesvik Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RomReal 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 RomReal 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.

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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.