Correlation Between Solstad Offshore and InterContinental
Can any of the company-specific risk be diversified away by investing in both Solstad Offshore and InterContinental 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 InterContinental 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 InterContinental Hotels Group, you can compare the effects of market volatilities on Solstad Offshore and InterContinental 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 InterContinental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solstad Offshore and InterContinental.
Diversification Opportunities for Solstad Offshore and InterContinental
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Solstad and InterContinental is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Solstad Offshore ASA and InterContinental Hotels Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InterContinental Hotels 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 InterContinental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InterContinental Hotels has no effect on the direction of Solstad Offshore i.e., Solstad Offshore and InterContinental go up and down completely randomly.
Pair Corralation between Solstad Offshore and InterContinental
Assuming the 90 days trading horizon Solstad Offshore ASA is expected to generate 3.95 times more return on investment than InterContinental. However, Solstad Offshore is 3.95 times more volatile than InterContinental Hotels Group. It trades about 0.29 of its potential returns per unit of risk. InterContinental Hotels Group is currently generating about 0.48 per unit of risk. If you would invest 3,138 in Solstad Offshore ASA on August 28, 2024 and sell it today you would earn a total of 1,060 from holding Solstad Offshore ASA or generate 33.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solstad Offshore ASA vs. InterContinental Hotels Group
Performance |
| Timeline |
| Solstad Offshore ASA |
| InterContinental Hotels |
Solstad Offshore and InterContinental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solstad Offshore and InterContinental
The main advantage of trading using opposite Solstad Offshore and InterContinental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solstad Offshore position performs unexpectedly, InterContinental 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 InterContinental will offset losses from the drop in InterContinental's long position.| Solstad Offshore vs. Samsung Electronics Co | Solstad Offshore vs. Samsung Electronics Co | Solstad Offshore vs. Hyundai Motor | Solstad Offshore vs. Toyota Motor Corp |
| InterContinental vs. Chocoladefabriken Lindt Spruengli | InterContinental vs. National Atomic Co | InterContinental vs. OTP Bank Nyrt | InterContinental vs. Samsung Electronics Co |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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