Correlation Between Solstad Offshore and Axfood AB
Can any of the company-specific risk be diversified away by investing in both Solstad Offshore and Axfood AB 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 Axfood AB 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 Axfood AB, you can compare the effects of market volatilities on Solstad Offshore and Axfood AB 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 Axfood AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solstad Offshore and Axfood AB.
Diversification Opportunities for Solstad Offshore and Axfood AB
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Solstad and Axfood is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Solstad Offshore ASA and Axfood AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axfood AB 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 Axfood AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axfood AB has no effect on the direction of Solstad Offshore i.e., Solstad Offshore and Axfood AB go up and down completely randomly.
Pair Corralation between Solstad Offshore and Axfood AB
Assuming the 90 days trading horizon Solstad Offshore ASA is expected to generate 4.85 times more return on investment than Axfood AB. However, Solstad Offshore is 4.85 times more volatile than Axfood AB. It trades about 0.24 of its potential returns per unit of risk. Axfood AB is currently generating about 0.02 per unit of risk. If you would invest 3,190 in Solstad Offshore ASA on August 31, 2024 and sell it today you would earn a total of 930.00 from holding Solstad Offshore ASA or generate 29.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solstad Offshore ASA vs. Axfood AB
Performance |
| Timeline |
| Solstad Offshore ASA |
| Axfood AB |
Solstad Offshore and Axfood AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solstad Offshore and Axfood AB
The main advantage of trading using opposite Solstad Offshore and Axfood AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solstad Offshore position performs unexpectedly, Axfood AB 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 Axfood AB will offset losses from the drop in Axfood AB's long position.| Solstad Offshore vs. Neometals | Solstad Offshore vs. Coor Service Management | Solstad Offshore vs. Aeorema Communications Plc | Solstad Offshore vs. JLEN Environmental Assets |
| Axfood AB vs. Take Two Interactive Software | Axfood AB vs. Melia Hotels | Axfood AB vs. Microchip Technology | Axfood AB vs. Compagnie Plastic Omnium |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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