Correlation Between Solstad Offshore and Odfjell Drilling
Can any of the company-specific risk be diversified away by investing in both Solstad Offshore and Odfjell Drilling 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 Odfjell Drilling 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 Odfjell Drilling, you can compare the effects of market volatilities on Solstad Offshore and Odfjell Drilling 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 Odfjell Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solstad Offshore and Odfjell Drilling.
Diversification Opportunities for Solstad Offshore and Odfjell Drilling
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Solstad and Odfjell is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Solstad Offshore ASA and Odfjell Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Odfjell Drilling 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 Odfjell Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Odfjell Drilling has no effect on the direction of Solstad Offshore i.e., Solstad Offshore and Odfjell Drilling go up and down completely randomly.
Pair Corralation between Solstad Offshore and Odfjell Drilling
Assuming the 90 days trading horizon Solstad Offshore ASA is expected to under-perform the Odfjell Drilling. But the stock apears to be less risky and, when comparing its historical volatility, Solstad Offshore ASA is 1.0 times less risky than Odfjell Drilling. The stock trades about -0.46 of its potential returns per unit of risk. The Odfjell Drilling is currently generating about -0.15 of returns per unit of risk over similar time horizon. If you would invest 6,044 in Odfjell Drilling on December 11, 2024 and sell it today you would lose (354.00) from holding Odfjell Drilling or give up 5.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solstad Offshore ASA vs. Odfjell Drilling
Performance |
| Timeline |
| Solstad Offshore ASA |
| Odfjell Drilling |
Solstad Offshore and Odfjell Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solstad Offshore and Odfjell Drilling
The main advantage of trading using opposite Solstad Offshore and Odfjell Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solstad Offshore position performs unexpectedly, Odfjell Drilling 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 Odfjell Drilling will offset losses from the drop in Odfjell Drilling's long position.| Solstad Offshore vs. Axfood AB | Solstad Offshore vs. Hochschild Mining plc | Solstad Offshore vs. Evolution Gaming Group | Solstad Offshore vs. Live Nation Entertainment |
| Odfjell Drilling vs. Endeavour Mining Corp | Odfjell Drilling vs. JD Sports Fashion | Odfjell Drilling vs. Vienna Insurance Group | Odfjell Drilling vs. Caledonia Mining |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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