Correlation Between Ebro Foods and Solstad Offshore
Can any of the company-specific risk be diversified away by investing in both Ebro Foods 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 Ebro Foods and Solstad Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ebro Foods and Solstad Offshore ASA, you can compare the effects of market volatilities on Ebro Foods 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 Ebro Foods with a short position of Solstad Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ebro Foods and Solstad Offshore.
Diversification Opportunities for Ebro Foods and Solstad Offshore
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ebro and Solstad is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Ebro Foods 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 Ebro Foods 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 Ebro Foods 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 Ebro Foods i.e., Ebro Foods and Solstad Offshore go up and down completely randomly.
Pair Corralation between Ebro Foods and Solstad Offshore
Assuming the 90 days trading horizon Ebro Foods is expected to under-perform the Solstad Offshore. But the stock apears to be less risky and, when comparing its historical volatility, Ebro Foods is 7.37 times less risky than Solstad Offshore. The stock trades about -0.07 of its potential returns per unit of risk. The Solstad Offshore ASA is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 3,099 in Solstad Offshore ASA on August 26, 2024 and sell it today you would earn a total of 831.00 from holding Solstad Offshore ASA or generate 26.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 86.36% |
| Values | Daily Returns |
Ebro Foods vs. Solstad Offshore ASA
Performance |
| Timeline |
| Ebro Foods |
| Solstad Offshore ASA |
Ebro Foods and Solstad Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ebro Foods and Solstad Offshore
The main advantage of trading using opposite Ebro Foods and Solstad Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ebro Foods 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.| Ebro Foods vs. Samsung Electronics Co | Ebro Foods vs. Samsung Electronics Co | Ebro Foods vs. Hyundai Motor | Ebro Foods vs. Toyota Motor Corp |
| Solstad Offshore vs. Air Products Chemicals | Solstad Offshore vs. New Residential Investment | Solstad Offshore vs. Liontrust Asset Management | Solstad Offshore vs. FC Investment Trust |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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