Correlation Between GoldMining and Solstad Offshore
Can any of the company-specific risk be diversified away by investing in both GoldMining 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 GoldMining and Solstad Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GoldMining and Solstad Offshore ASA, you can compare the effects of market volatilities on GoldMining 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 GoldMining with a short position of Solstad Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of GoldMining and Solstad Offshore.
Diversification Opportunities for GoldMining and Solstad Offshore
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GoldMining and Solstad is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding GoldMining 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 GoldMining 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 GoldMining 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 GoldMining i.e., GoldMining and Solstad Offshore go up and down completely randomly.
Pair Corralation between GoldMining and Solstad Offshore
Assuming the 90 days trading horizon GoldMining is expected to under-perform the Solstad Offshore. But the stock apears to be less risky and, when comparing its historical volatility, GoldMining is 1.08 times less risky than Solstad Offshore. The stock trades about -0.01 of its potential returns per unit of risk. The Solstad Offshore ASA is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 4,395 in Solstad Offshore ASA on November 19, 2024 and sell it today you would lose (538.00) from holding Solstad Offshore ASA or give up 12.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 42.09% |
| Values | Daily Returns |
GoldMining vs. Solstad Offshore ASA
Performance |
| Timeline |
| GoldMining |
| Solstad Offshore ASA |
GoldMining and Solstad Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GoldMining and Solstad Offshore
The main advantage of trading using opposite GoldMining and Solstad Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GoldMining 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.| GoldMining vs. Central Asia Metals | GoldMining vs. AMG Advanced Metallurgical | GoldMining vs. Heavitree Brewery | GoldMining vs. National Beverage Corp |
| Solstad Offshore vs. Pentair PLC | Solstad Offshore vs. Micron Technology | Solstad Offshore vs. Fair Oaks Income | Solstad Offshore vs. Ashtead Technology Holdings |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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