Correlation Between Eidesvik Offshore and American Shipping

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

Diversification Opportunities for Eidesvik Offshore and American Shipping

-0.71

Correlation Coefficient

Eidesvik Offshore  American Shipping

Pay attention - limited upside

The 3 months correlation between Eidesvik and American is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Eidesvik Offshore ASA and American Shipping in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Shipping 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 American Shipping. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Shipping has no effect on the direction of Eidesvik Offshore i.e., Eidesvik Offshore and American Shipping go up and down completely randomly.

Pair Corralation between Eidesvik Offshore and American Shipping

Assuming the 90 days trading horizon Eidesvik Offshore ASA is expected to generate 0.16 times more return on investment than American Shipping. However, Eidesvik Offshore ASA is 6.33 times less risky than American Shipping. It trades about 0.12 of its potential returns per unit of risk. American Shipping is currently generating about -0.11 per unit of risk. If you would invest  1,130  in Eidesvik Offshore ASA on April 24, 2025 and sell it today you would earn a total of  155.00  from holding Eidesvik Offshore ASA or generate 13.72% return on investment over 90 days.

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

Eidesvik Offshore ASA  vs.  American Shipping

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 9 (%) of all global equities and portfolios over the last 90 days. Despite quite weak essential indicators, Eidesvik Offshore disclosed solid returns over the last few months and may actually be approaching a breakup point.

American Shipping

Risk-Adjusted Performance

Very Weak

Over the last 90 days American Shipping 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 essential indicators remain quite persistent which may send shares a bit higher in August 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Eidesvik Offshore and American Shipping

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

The idea behind Eidesvik Offshore ASA and American Shipping 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.