Correlation Between Solstad Offshore and Automatic Data
Can any of the company-specific risk be diversified away by investing in both Solstad Offshore and Automatic Data 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 Solstad Offshore and Automatic Data into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solstad Offshore ASA and Automatic Data Processing, you can compare the effects of market volatilities on Solstad Offshore and Automatic Data 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 Solstad Offshore with a short position of Automatic Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solstad Offshore and Automatic Data.
Diversification Opportunities for Solstad Offshore and Automatic Data
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Solstad and Automatic is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Solstad Offshore ASA and Automatic Data Processing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Automatic Data Processing and Solstad 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 Solstad Offshore ASA are associated (or correlated) with Automatic Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Automatic Data Processing has no effect on the direction of Solstad Offshore i.e., Solstad Offshore and Automatic Data go up and down completely randomly.
Pair Corralation between Solstad Offshore and Automatic Data
Assuming the 90 days trading horizon Solstad Offshore ASA is expected to generate 2.95 times more return on investment than Automatic Data. However, Solstad Offshore is 2.95 times more volatile than Automatic Data Processing. It trades about 0.1 of its potential returns per unit of risk. Automatic Data Processing is currently generating about 0.08 per unit of risk. If you would invest 3,922 in Solstad Offshore ASA on October 24, 2024 and sell it today you would earn a total of 164.00 from holding Solstad Offshore ASA or generate 4.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Solstad Offshore ASA vs. Automatic Data Processing
Performance |
| Timeline |
| Solstad Offshore ASA |
| Automatic Data Processing |
Solstad Offshore and Automatic Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solstad Offshore and Automatic Data
The main advantage of trading using opposite Solstad Offshore and Automatic Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solstad Offshore position performs unexpectedly, Automatic Data 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 Automatic Data will offset losses from the drop in Automatic Data's long position.| Solstad Offshore vs. Toyota Motor Corp | Solstad Offshore vs. SoftBank Group Corp | Solstad Offshore vs. OTP Bank Nyrt | Solstad Offshore vs. ONEOK Inc |
| Automatic Data vs. Toyota Motor Corp | Automatic Data vs. SoftBank Group Corp | Automatic Data vs. OTP Bank Nyrt | Automatic Data vs. ONEOK Inc |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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