Correlation Between Solstad Offshore and Europa Metals
Can any of the company-specific risk be diversified away by investing in both Solstad Offshore and Europa 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 Europa 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 Europa Metals, you can compare the effects of market volatilities on Solstad Offshore and Europa 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 Europa Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solstad Offshore and Europa Metals.
Diversification Opportunities for Solstad Offshore and Europa Metals
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Solstad and Europa is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Solstad Offshore ASA and Europa Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Europa Metals 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 Europa Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Europa Metals has no effect on the direction of Solstad Offshore i.e., Solstad Offshore and Europa Metals go up and down completely randomly.
Pair Corralation between Solstad Offshore and Europa Metals
Assuming the 90 days trading horizon Solstad Offshore ASA is expected to generate 1.11 times more return on investment than Europa Metals. However, Solstad Offshore is 1.11 times more volatile than Europa Metals. It trades about 0.08 of its potential returns per unit of risk. Europa Metals is currently generating about -0.01 per unit of risk. If you would invest 2,056 in Solstad Offshore ASA on August 29, 2024 and sell it today you would earn a total of 2,244 from holding Solstad Offshore ASA or generate 109.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.37% |
| Values | Daily Returns |
Solstad Offshore ASA vs. Europa Metals
Performance |
| Timeline |
| Solstad Offshore ASA |
| Europa Metals |
Solstad Offshore and Europa Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solstad Offshore and Europa Metals
The main advantage of trading using opposite Solstad Offshore and Europa Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solstad Offshore position performs unexpectedly, Europa 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 Europa Metals will offset losses from the drop in Europa Metals' long position.| Solstad Offshore vs. Lendinvest PLC | Solstad Offshore vs. Neometals | Solstad Offshore vs. Albion Technology General | Solstad Offshore vs. Jupiter Fund Management |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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