Correlation Between Solstad Offshore and Ocean Harvest
Can any of the company-specific risk be diversified away by investing in both Solstad Offshore and Ocean Harvest 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 Ocean Harvest 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 Ocean Harvest Technology, you can compare the effects of market volatilities on Solstad Offshore and Ocean Harvest 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 Ocean Harvest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solstad Offshore and Ocean Harvest.
Diversification Opportunities for Solstad Offshore and Ocean Harvest
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Solstad and Ocean is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Solstad Offshore ASA and Ocean Harvest Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ocean Harvest Technology 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 Ocean Harvest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ocean Harvest Technology has no effect on the direction of Solstad Offshore i.e., Solstad Offshore and Ocean Harvest go up and down completely randomly.
Pair Corralation between Solstad Offshore and Ocean Harvest
Assuming the 90 days trading horizon Solstad Offshore ASA is expected to generate 3.18 times more return on investment than Ocean Harvest. However, Solstad Offshore is 3.18 times more volatile than Ocean Harvest Technology. It trades about 0.29 of its potential returns per unit of risk. Ocean Harvest Technology is currently generating about 0.09 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 Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solstad Offshore ASA vs. Ocean Harvest Technology
Performance |
| Timeline |
| Solstad Offshore ASA |
| Ocean Harvest Technology |
Solstad Offshore and Ocean Harvest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solstad Offshore and Ocean Harvest
The main advantage of trading using opposite Solstad Offshore and Ocean Harvest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solstad Offshore position performs unexpectedly, Ocean Harvest 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 Ocean Harvest will offset losses from the drop in Ocean Harvest'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 |
| Ocean Harvest vs. Walmart | Ocean Harvest vs. BYD Co | Ocean Harvest vs. Volkswagen AG Non Vtg | Ocean Harvest vs. Deutsche Post AG |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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