Correlation Between Eidesvik Offshore and ECHO INVESTMENT

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

Diversification Opportunities for Eidesvik Offshore and ECHO INVESTMENT

0.22

Correlation Coefficient

Eidesvik Offshore  ECHO INVESTMENT

Modest diversification

The 3 months correlation between Eidesvik and ECHO is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Eidesvik Offshore ASA and ECHO INVESTMENT ZY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECHO INVESTMENT ZY 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 ECHO INVESTMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECHO INVESTMENT ZY has no effect on the direction of Eidesvik Offshore i.e., Eidesvik Offshore and ECHO INVESTMENT go up and down completely randomly.

Pair Corralation between Eidesvik Offshore and ECHO INVESTMENT

Assuming the 90 days trading horizon Eidesvik Offshore ASA is expected to generate 1.31 times more return on investment than ECHO INVESTMENT. However, Eidesvik Offshore is 1.31 times more volatile than ECHO INVESTMENT ZY. It trades about 0.09 of its potential returns per unit of risk. ECHO INVESTMENT ZY is currently generating about 0.12 per unit of risk. If you would invest  91.00  in Eidesvik Offshore ASA on April 20, 2025 and sell it today you would earn a total of  11.00  from holding Eidesvik Offshore ASA or generate 12.09% 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.  ECHO INVESTMENT ZY

Eidesvik Offshore ASA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eidesvik Offshore ASA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Eidesvik Offshore unveiled solid returns over the last few months and may actually be approaching a breakup point.

ECHO INVESTMENT ZY

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ECHO INVESTMENT ZY are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ECHO INVESTMENT may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Eidesvik Offshore and ECHO INVESTMENT

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

The idea behind Eidesvik Offshore ASA and ECHO INVESTMENT ZY 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.