Correlation Between Solstad Offshore and Veolia Environnement
Can any of the company-specific risk be diversified away by investing in both Solstad Offshore and Veolia Environnement 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 Veolia Environnement 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 Veolia Environnement VE, you can compare the effects of market volatilities on Solstad Offshore and Veolia Environnement 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 Veolia Environnement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solstad Offshore and Veolia Environnement.
Diversification Opportunities for Solstad Offshore and Veolia Environnement
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Solstad and Veolia is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Solstad Offshore ASA and Veolia Environnement VE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veolia Environnement 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 Veolia Environnement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Veolia Environnement has no effect on the direction of Solstad Offshore i.e., Solstad Offshore and Veolia Environnement go up and down completely randomly.
Pair Corralation between Solstad Offshore and Veolia Environnement
Assuming the 90 days trading horizon Solstad Offshore ASA is expected to generate 3.68 times more return on investment than Veolia Environnement. However, Solstad Offshore is 3.68 times more volatile than Veolia Environnement VE. It trades about 0.03 of its potential returns per unit of risk. Veolia Environnement VE is currently generating about 0.03 per unit of risk. If you would invest 3,197 in Solstad Offshore ASA on August 30, 2024 and sell it today you would earn a total of 1,103 from holding Solstad Offshore ASA or generate 34.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.0% |
| Values | Daily Returns |
Solstad Offshore ASA vs. Veolia Environnement VE
Performance |
| Timeline |
| Solstad Offshore ASA |
| Veolia Environnement |
Solstad Offshore and Veolia Environnement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solstad Offshore and Veolia Environnement
The main advantage of trading using opposite Solstad Offshore and Veolia Environnement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solstad Offshore position performs unexpectedly, Veolia Environnement 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 Veolia Environnement will offset losses from the drop in Veolia Environnement's long position.| Solstad Offshore vs. Lendinvest PLC | Solstad Offshore vs. Neometals | Solstad Offshore vs. Albion Technology General | Solstad Offshore vs. Jupiter Fund Management |
| Veolia Environnement vs. Lendinvest PLC | Veolia Environnement vs. Neometals | Veolia Environnement vs. Albion Technology General | Veolia Environnement vs. Jupiter Fund Management |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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