Correlation Between Solstad Offshore and Catena Media
Can any of the company-specific risk be diversified away by investing in both Solstad Offshore and Catena Media 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 Catena Media 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 Catena Media PLC, you can compare the effects of market volatilities on Solstad Offshore and Catena Media 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 Catena Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solstad Offshore and Catena Media.
Diversification Opportunities for Solstad Offshore and Catena Media
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Solstad and Catena is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Solstad Offshore ASA and Catena Media PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catena Media PLC 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 Catena Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catena Media PLC has no effect on the direction of Solstad Offshore i.e., Solstad Offshore and Catena Media go up and down completely randomly.
Pair Corralation between Solstad Offshore and Catena Media
Assuming the 90 days trading horizon Solstad Offshore ASA is expected to generate 1.48 times more return on investment than Catena Media. However, Solstad Offshore is 1.48 times more volatile than Catena Media PLC. It trades about 0.28 of its potential returns per unit of risk. Catena Media PLC is currently generating about -0.21 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 Together |
| Strength | Significant |
| Accuracy | 86.96% |
| Values | Daily Returns |
Solstad Offshore ASA vs. Catena Media PLC
Performance |
| Timeline |
| Solstad Offshore ASA |
| Catena Media PLC |
Solstad Offshore and Catena Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solstad Offshore and Catena Media
The main advantage of trading using opposite Solstad Offshore and Catena Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solstad Offshore position performs unexpectedly, Catena Media 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 Catena Media will offset losses from the drop in Catena Media's 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 |
| Catena Media vs. Primorus Investments plc | Catena Media vs. International Consolidated Airlines | Catena Media vs. Batm Advanced Communications | Catena Media vs. Gamma Communications 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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