Correlation Between Automatic Data and Solstad Offshore
Can any of the company-specific risk be diversified away by investing in both Automatic Data and Solstad Offshore 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 Automatic Data and Solstad Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Automatic Data Processing and Solstad Offshore ASA, you can compare the effects of market volatilities on Automatic Data and Solstad Offshore 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 Automatic Data with a short position of Solstad Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automatic Data and Solstad Offshore.
Diversification Opportunities for Automatic Data and Solstad Offshore
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Automatic and Solstad is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Automatic Data Processing and Solstad Offshore ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solstad Offshore ASA and Automatic Data 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 Automatic Data Processing are associated (or correlated) with Solstad Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solstad Offshore ASA has no effect on the direction of Automatic Data i.e., Automatic Data and Solstad Offshore go up and down completely randomly.
Pair Corralation between Automatic Data and Solstad Offshore
Assuming the 90 days trading horizon Automatic Data is expected to generate 1.85 times less return on investment than Solstad Offshore. But when comparing it to its historical volatility, Automatic Data Processing is 2.93 times less risky than Solstad Offshore. It trades about 0.1 of its potential returns per unit of risk. Solstad Offshore ASA is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 3,922 in Solstad Offshore ASA on October 24, 2024 and sell it today you would earn a total of 94.00 from holding Solstad Offshore ASA or generate 2.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Automatic Data Processing vs. Solstad Offshore ASA
Performance |
| Timeline |
| Automatic Data Processing |
| Solstad Offshore ASA |
Automatic Data and Solstad Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Automatic Data and Solstad Offshore
The main advantage of trading using opposite Automatic Data and Solstad Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automatic Data position performs unexpectedly, Solstad Offshore 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 Solstad Offshore will offset losses from the drop in Solstad Offshore's long position.| Automatic Data vs. Wheaton Precious Metals | Automatic Data vs. Molson Coors Beverage | Automatic Data vs. Monster Beverage Corp | Automatic Data vs. URU Metals |
| Solstad Offshore vs. Capital Metals PLC | Solstad Offshore vs. Alien Metals | Solstad Offshore vs. United Airlines Holdings | Solstad Offshore vs. Automatic Data Processing |
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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