Correlation Between Solstad Offshore and Induction Healthcare
Can any of the company-specific risk be diversified away by investing in both Solstad Offshore and Induction Healthcare 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 Induction Healthcare 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 Induction Healthcare Group, you can compare the effects of market volatilities on Solstad Offshore and Induction Healthcare 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 Induction Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solstad Offshore and Induction Healthcare.
Diversification Opportunities for Solstad Offshore and Induction Healthcare
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Solstad and Induction is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Solstad Offshore ASA and Induction Healthcare Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Induction Healthcare 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 Induction Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Induction Healthcare has no effect on the direction of Solstad Offshore i.e., Solstad Offshore and Induction Healthcare go up and down completely randomly.
Pair Corralation between Solstad Offshore and Induction Healthcare
Assuming the 90 days trading horizon Solstad Offshore ASA is expected to generate 1.15 times more return on investment than Induction Healthcare. However, Solstad Offshore is 1.15 times more volatile than Induction Healthcare Group. It trades about 0.28 of its potential returns per unit of risk. Induction Healthcare Group is currently generating about 0.21 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 | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Solstad Offshore ASA vs. Induction Healthcare Group
Performance |
| Timeline |
| Solstad Offshore ASA |
| Induction Healthcare |
Solstad Offshore and Induction Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solstad Offshore and Induction Healthcare
The main advantage of trading using opposite Solstad Offshore and Induction Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solstad Offshore position performs unexpectedly, Induction Healthcare 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 Induction Healthcare will offset losses from the drop in Induction Healthcare's long position.| Solstad Offshore vs. Tungsten West PLC | Solstad Offshore vs. Argo Group Limited | Solstad Offshore vs. Hardide PLC | Solstad Offshore vs. Versarien PLC |
| Induction Healthcare vs. Toyota Motor Corp | Induction Healthcare vs. SoftBank Group Corp | Induction Healthcare vs. OTP Bank Nyrt | Induction Healthcare vs. Las Vegas Sands |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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