Correlation Between Solstad Offshore and BT Group
Can any of the company-specific risk be diversified away by investing in both Solstad Offshore and BT Group 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 BT Group 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 BT Group Plc, you can compare the effects of market volatilities on Solstad Offshore and BT Group 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 BT Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solstad Offshore and BT Group.
Diversification Opportunities for Solstad Offshore and BT Group
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Solstad and BT-A is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Solstad Offshore ASA and BT Group Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BT Group 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 BT Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BT Group Plc has no effect on the direction of Solstad Offshore i.e., Solstad Offshore and BT Group go up and down completely randomly.
Pair Corralation between Solstad Offshore and BT Group
Assuming the 90 days trading horizon Solstad Offshore ASA is expected to generate 2.57 times more return on investment than BT Group. However, Solstad Offshore is 2.57 times more volatile than BT Group Plc. It trades about 0.29 of its potential returns per unit of risk. BT Group Plc is currently generating about 0.3 per unit of risk. If you would invest 3,190 in Solstad Offshore ASA on August 30, 2024 and sell it today you would earn a total of 1,110 from holding Solstad Offshore ASA or generate 34.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solstad Offshore ASA vs. BT Group Plc
Performance |
| Timeline |
| Solstad Offshore ASA |
| BT Group Plc |
Solstad Offshore and BT Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solstad Offshore and BT Group
The main advantage of trading using opposite Solstad Offshore and BT Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solstad Offshore position performs unexpectedly, BT Group 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 BT Group will offset losses from the drop in BT Group's long position.| Solstad Offshore vs. Lendinvest PLC | Solstad Offshore vs. Neometals | Solstad Offshore vs. Albion Technology General | Solstad Offshore vs. Jupiter Fund Management |
| BT Group vs. FC Investment Trust | BT Group vs. Coor Service Management | BT Group vs. STMicroelectronics NV | BT Group vs. Hansa Investment |
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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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