Correlation Between Solstad Offshore and Metals Exploration
Can any of the company-specific risk be diversified away by investing in both Solstad Offshore and Metals Exploration 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 Metals Exploration 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 Metals Exploration Plc, you can compare the effects of market volatilities on Solstad Offshore and Metals Exploration 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 Metals Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solstad Offshore and Metals Exploration.
Diversification Opportunities for Solstad Offshore and Metals Exploration
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Solstad and Metals is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Solstad Offshore ASA and Metals Exploration Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metals Exploration 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 Metals Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metals Exploration Plc has no effect on the direction of Solstad Offshore i.e., Solstad Offshore and Metals Exploration go up and down completely randomly.
Pair Corralation between Solstad Offshore and Metals Exploration
Assuming the 90 days trading horizon Solstad Offshore is expected to generate 3.02 times less return on investment than Metals Exploration. In addition to that, Solstad Offshore is 1.03 times more volatile than Metals Exploration Plc. It trades about 0.03 of its total potential returns per unit of risk. Metals Exploration Plc is currently generating about 0.1 per unit of volatility. If you would invest 115.00 in Metals Exploration Plc on August 26, 2024 and sell it today you would earn a total of 460.00 from holding Metals Exploration Plc or generate 400.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Solstad Offshore ASA vs. Metals Exploration Plc
Performance |
| Timeline |
| Solstad Offshore ASA |
| Metals Exploration Plc |
Solstad Offshore and Metals Exploration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solstad Offshore and Metals Exploration
The main advantage of trading using opposite Solstad Offshore and Metals Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solstad Offshore position performs unexpectedly, Metals Exploration 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 Metals Exploration will offset losses from the drop in Metals Exploration's long position.| Solstad Offshore vs. Host Hotels Resorts | Solstad Offshore vs. iShares Physical Silver | Solstad Offshore vs. Pets at Home | Solstad Offshore vs. Endeavour Mining Corp |
| Metals Exploration vs. Solstad Offshore ASA | Metals Exploration vs. Orient Telecoms | Metals Exploration vs. Spirent Communications plc | Metals Exploration vs. SBM Offshore NV |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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