Correlation Between Solstad Offshore and Capital Metals
Can any of the company-specific risk be diversified away by investing in both Solstad Offshore and Capital Metals 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 Capital Metals 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 Capital Metals PLC, you can compare the effects of market volatilities on Solstad Offshore and Capital Metals 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 Capital Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solstad Offshore and Capital Metals.
Diversification Opportunities for Solstad Offshore and Capital Metals
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Solstad and Capital is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Solstad Offshore ASA and Capital Metals PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Metals 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 Capital Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Metals PLC has no effect on the direction of Solstad Offshore i.e., Solstad Offshore and Capital Metals go up and down completely randomly.
Pair Corralation between Solstad Offshore and Capital Metals
Assuming the 90 days trading horizon Solstad Offshore ASA is expected to generate 1.04 times more return on investment than Capital Metals. However, Solstad Offshore is 1.04 times more volatile than Capital Metals PLC. It trades about 0.04 of its potential returns per unit of risk. Capital Metals PLC is currently generating about -0.21 per unit of risk. If you would invest 3,990 in Solstad Offshore ASA on November 3, 2024 and sell it today you would earn a total of 50.00 from holding Solstad Offshore ASA or generate 1.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Solstad Offshore ASA vs. Capital Metals PLC
Performance |
| Timeline |
| Solstad Offshore ASA |
| Capital Metals PLC |
Solstad Offshore and Capital Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solstad Offshore and Capital Metals
The main advantage of trading using opposite Solstad Offshore and Capital Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solstad Offshore position performs unexpectedly, Capital Metals 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 Capital Metals will offset losses from the drop in Capital Metals' long position.| Solstad Offshore vs. Zegona Communications Plc | Solstad Offshore vs. Universal Display Corp | Solstad Offshore vs. Summit Materials Cl | Solstad Offshore vs. Darden Restaurants |
| Capital Metals vs. Lowland Investment Co | Capital Metals vs. Seraphim Space Investment | Capital Metals vs. Vietnam Enterprise Investments | Capital Metals vs. New Residential 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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