Correlation Between Solstad Offshore and Associated British
Can any of the company-specific risk be diversified away by investing in both Solstad Offshore and Associated British 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 Associated British 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 Associated British Foods, you can compare the effects of market volatilities on Solstad Offshore and Associated British 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 Associated British. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solstad Offshore and Associated British.
Diversification Opportunities for Solstad Offshore and Associated British
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Solstad and Associated is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Solstad Offshore ASA and Associated British Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Associated British Foods 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 Associated British. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Associated British Foods has no effect on the direction of Solstad Offshore i.e., Solstad Offshore and Associated British go up and down completely randomly.
Pair Corralation between Solstad Offshore and Associated British
Assuming the 90 days trading horizon Solstad Offshore ASA is expected to generate 3.02 times more return on investment than Associated British. However, Solstad Offshore is 3.02 times more volatile than Associated British Foods. It trades about 0.03 of its potential returns per unit of risk. Associated British Foods is currently generating about 0.06 per unit of risk. If you would invest 3,069 in Solstad Offshore ASA on August 24, 2024 and sell it today you would earn a total of 861.00 from holding Solstad Offshore ASA or generate 28.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Solstad Offshore ASA vs. Associated British Foods
Performance |
| Timeline |
| Solstad Offshore ASA |
| Associated British Foods |
Solstad Offshore and Associated British Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solstad Offshore and Associated British
The main advantage of trading using opposite Solstad Offshore and Associated British positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solstad Offshore position performs unexpectedly, Associated British 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 Associated British will offset losses from the drop in Associated British'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 |
| Associated British vs. Tyson Foods Cl | Associated British vs. Cairo Communication SpA | Associated British vs. Hilton Food Group | Associated British vs. Taiwan Semiconductor Manufacturing |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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