Correlation Between Solstad Offshore and BW Offshore
Can any of the company-specific risk be diversified away by investing in both Solstad Offshore and BW Offshore 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 BW Offshore 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 BW Offshore, you can compare the effects of market volatilities on Solstad Offshore and BW Offshore 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 BW Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solstad Offshore and BW Offshore.
Diversification Opportunities for Solstad Offshore and BW Offshore
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Solstad and 0RKH is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Solstad Offshore ASA and BW Offshore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BW Offshore 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 BW Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BW Offshore has no effect on the direction of Solstad Offshore i.e., Solstad Offshore and BW Offshore go up and down completely randomly.
Pair Corralation between Solstad Offshore and BW Offshore
Assuming the 90 days trading horizon Solstad Offshore ASA is expected to generate 1.77 times more return on investment than BW Offshore. However, Solstad Offshore is 1.77 times more volatile than BW Offshore. It trades about 0.26 of its potential returns per unit of risk. BW Offshore is currently generating about -0.04 per unit of risk. If you would invest 3,099 in Solstad Offshore ASA on August 26, 2024 and sell it today you would earn a total of 831.00 from holding Solstad Offshore ASA or generate 26.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 86.36% |
| Values | Daily Returns |
Solstad Offshore ASA vs. BW Offshore
Performance |
| Timeline |
| Solstad Offshore ASA |
| BW Offshore |
Solstad Offshore and BW Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solstad Offshore and BW Offshore
The main advantage of trading using opposite Solstad Offshore and BW Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solstad Offshore position performs unexpectedly, BW Offshore 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 BW Offshore will offset losses from the drop in BW Offshore's long position.| Solstad Offshore vs. Air Products Chemicals | Solstad Offshore vs. New Residential Investment | Solstad Offshore vs. Liontrust Asset Management | Solstad Offshore vs. FC Investment Trust |
| BW Offshore vs. Zegona Communications Plc | BW Offshore vs. InterContinental Hotels Group | BW Offshore vs. Dalata Hotel Group | BW Offshore vs. Melia Hotels |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |