Correlation Between Solstad Offshore and Premier Foods
Can any of the company-specific risk be diversified away by investing in both Solstad Offshore and Premier Foods 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 Premier Foods 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 Premier Foods PLC, you can compare the effects of market volatilities on Solstad Offshore and Premier Foods 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 Premier Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solstad Offshore and Premier Foods.
Diversification Opportunities for Solstad Offshore and Premier Foods
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Solstad and Premier is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Solstad Offshore ASA and Premier Foods PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premier Foods 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 Premier Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premier Foods PLC has no effect on the direction of Solstad Offshore i.e., Solstad Offshore and Premier Foods go up and down completely randomly.
Pair Corralation between Solstad Offshore and Premier Foods
Assuming the 90 days trading horizon Solstad Offshore ASA is expected to generate 4.35 times more return on investment than Premier Foods. However, Solstad Offshore is 4.35 times more volatile than Premier Foods PLC. It trades about 0.25 of its potential returns per unit of risk. Premier Foods PLC is currently generating about -0.03 per unit of risk. If you would invest 3,138 in Solstad Offshore ASA on August 27, 2024 and sell it today you would earn a total of 792.00 from holding Solstad Offshore ASA or generate 25.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 85.71% |
| Values | Daily Returns |
Solstad Offshore ASA vs. Premier Foods PLC
Performance |
| Timeline |
| Solstad Offshore ASA |
| Premier Foods PLC |
Solstad Offshore and Premier Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solstad Offshore and Premier Foods
The main advantage of trading using opposite Solstad Offshore and Premier Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solstad Offshore position performs unexpectedly, Premier Foods 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 Premier Foods will offset losses from the drop in Premier Foods' 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 |
| Premier Foods vs. Edita Food Industries | Premier Foods vs. Grieg Seafood | Premier Foods vs. Cairo Communication SpA | Premier Foods vs. Axfood AB |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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