Correlation Between Japan Post and Solstad Offshore
Can any of the company-specific risk be diversified away by investing in both Japan Post 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 Japan Post and Solstad Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Japan Post Insurance and Solstad Offshore ASA, you can compare the effects of market volatilities on Japan Post 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 Japan Post with a short position of Solstad Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Post and Solstad Offshore.
Diversification Opportunities for Japan Post and Solstad Offshore
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Japan and Solstad is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Japan Post Insurance 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 Japan Post 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 Japan Post Insurance 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 Japan Post i.e., Japan Post and Solstad Offshore go up and down completely randomly.
Pair Corralation between Japan Post and Solstad Offshore
Assuming the 90 days trading horizon Japan Post Insurance is expected to generate 0.54 times more return on investment than Solstad Offshore. However, Japan Post Insurance is 1.84 times less risky than Solstad Offshore. It trades about 0.05 of its potential returns per unit of risk. Solstad Offshore ASA is currently generating about 0.01 per unit of risk. If you would invest 1,690 in Japan Post Insurance on November 28, 2024 and sell it today you would earn a total of 140.00 from holding Japan Post Insurance or generate 8.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.19% |
| Values | Daily Returns |
Japan Post Insurance vs. Solstad Offshore ASA
Performance |
| Timeline |
| Japan Post Insurance |
| Solstad Offshore ASA |
Japan Post and Solstad Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Japan Post and Solstad Offshore
The main advantage of trading using opposite Japan Post and Solstad Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Post 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.The idea behind Japan Post Insurance and Solstad Offshore ASA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Solstad Offshore vs. Take Two Interactive Software | Solstad Offshore vs. Major Drilling Group | Solstad Offshore vs. Guidewire Software | Solstad Offshore vs. ATOSS SOFTWARE |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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