Correlation Between Wilh Wilhelmsen and Eidesvik Offshore

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

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

Diversification Opportunities for Wilh Wilhelmsen and Eidesvik Offshore

0.06

Correlation Coefficient

Wilh Wilhelmsen  Eidesvik Offshore

Significant diversification

The 3 months correlation between Wilh and Eidesvik is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Wilh Wilhelmsen Holding 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 Wilh Wilhelmsen 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 Wilh Wilhelmsen Holding 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 Wilh Wilhelmsen i.e., Wilh Wilhelmsen and Eidesvik Offshore go up and down completely randomly.

Pair Corralation between Wilh Wilhelmsen and Eidesvik Offshore

Assuming the 90 days trading horizon Wilh Wilhelmsen is expected to generate 8.94 times less return on investment than Eidesvik Offshore. But when comparing it to its historical volatility, Wilh Wilhelmsen Holding is 1.17 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 0.22 of returns per unit of risk over similar time horizon. If you would invest  1,310  in Eidesvik Offshore ASA on January 29, 2024 and sell it today you would earn a total of  226.00  from holding Eidesvik Offshore ASA or generate 17.25% return on investment over 90 days.

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

Wilh Wilhelmsen Holding  vs.  Eidesvik Offshore ASA

Wilh Wilhelmsen Holding

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Wilh Wilhelmsen Holding are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Wilh Wilhelmsen 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

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eidesvik Offshore ASA are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Eidesvik Offshore disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Wilh Wilhelmsen and Eidesvik Offshore

The main advantage of trading using opposite Wilh Wilhelmsen and Eidesvik Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wilh Wilhelmsen 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 Wilh Wilhelmsen Holding 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 Global Correlations module to find global opportunities by holding instruments from different markets.