Correlation Between Scandic Hotels and Solstad Offshore
Can any of the company-specific risk be diversified away by investing in both Scandic Hotels 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 Scandic Hotels and Solstad Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scandic Hotels Group and Solstad Offshore ASA, you can compare the effects of market volatilities on Scandic Hotels 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 Scandic Hotels with a short position of Solstad Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandic Hotels and Solstad Offshore.
Diversification Opportunities for Scandic Hotels and Solstad Offshore
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Scandic and Solstad is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Scandic Hotels Group 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 Scandic Hotels 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 Scandic Hotels Group 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 Scandic Hotels i.e., Scandic Hotels and Solstad Offshore go up and down completely randomly.
Pair Corralation between Scandic Hotels and Solstad Offshore
Assuming the 90 days trading horizon Scandic Hotels Group is expected to generate 0.58 times more return on investment than Solstad Offshore. However, Scandic Hotels Group is 1.71 times less risky than Solstad Offshore. It trades about 0.15 of its potential returns per unit of risk. Solstad Offshore ASA is currently generating about -0.02 per unit of risk. If you would invest 6,541 in Scandic Hotels Group on October 25, 2024 and sell it today you would earn a total of 544.00 from holding Scandic Hotels Group or generate 8.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Scandic Hotels Group vs. Solstad Offshore ASA
Performance |
| Timeline |
| Scandic Hotels Group |
| Solstad Offshore ASA |
Scandic Hotels and Solstad Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scandic Hotels and Solstad Offshore
The main advantage of trading using opposite Scandic Hotels and Solstad Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandic Hotels 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.| Scandic Hotels vs. Toyota Motor Corp | Scandic Hotels vs. SoftBank Group Corp | Scandic Hotels vs. OTP Bank Nyrt | Scandic Hotels vs. ONEOK Inc |
| Solstad Offshore vs. Toyota Motor Corp | Solstad Offshore vs. SoftBank Group Corp | Solstad Offshore vs. OTP Bank Nyrt | Solstad Offshore vs. ONEOK Inc |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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