Correlation Between Solstad Offshore and Scandic Hotels
Can any of the company-specific risk be diversified away by investing in both Solstad Offshore and Scandic Hotels 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 Scandic Hotels 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 Scandic Hotels Group, you can compare the effects of market volatilities on Solstad Offshore and Scandic Hotels 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 Scandic Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solstad Offshore and Scandic Hotels.
Diversification Opportunities for Solstad Offshore and Scandic Hotels
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Solstad and Scandic is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Solstad Offshore ASA and Scandic Hotels Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandic Hotels Group 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 Scandic Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scandic Hotels Group has no effect on the direction of Solstad Offshore i.e., Solstad Offshore and Scandic Hotels go up and down completely randomly.
Pair Corralation between Solstad Offshore and Scandic Hotels
Assuming the 90 days trading horizon Solstad Offshore ASA is expected to generate 3.36 times more return on investment than Scandic Hotels. However, Solstad Offshore is 3.36 times more volatile than Scandic Hotels Group. It trades about 0.28 of its potential returns per unit of risk. Scandic Hotels Group is currently generating about -0.3 per unit of risk. If you would invest 3,003 in Solstad Offshore ASA on August 24, 2024 and sell it today you would earn a total of 927.00 from holding Solstad Offshore ASA or generate 30.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 86.96% |
| Values | Daily Returns |
Solstad Offshore ASA vs. Scandic Hotels Group
Performance |
| Timeline |
| Solstad Offshore ASA |
| Scandic Hotels Group |
Solstad Offshore and Scandic Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solstad Offshore and Scandic Hotels
The main advantage of trading using opposite Solstad Offshore and Scandic Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solstad Offshore position performs unexpectedly, Scandic Hotels 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 Scandic Hotels will offset losses from the drop in Scandic Hotels' long position.| Solstad Offshore vs. Quadrise Plc | Solstad Offshore vs. Intuitive Investments Group | Solstad Offshore vs. European Metals Holdings | Solstad Offshore vs. Athelney Trust plc |
| Scandic Hotels vs. Quadrise Plc | Scandic Hotels vs. Intuitive Investments Group | Scandic Hotels vs. European Metals Holdings | Scandic Hotels vs. Athelney Trust plc |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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