Correlation Between ARISTOCRAT LEISURE and SOLSTAD OFFSHORE
Can any of the company-specific risk be diversified away by investing in both ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE and SOLSTAD OFFSHORE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ARISTOCRAT LEISURE and SOLSTAD OFFSHORE NK, you can compare the effects of market volatilities on ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE with a short position of SOLSTAD OFFSHORE. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARISTOCRAT LEISURE and SOLSTAD OFFSHORE.
Diversification Opportunities for ARISTOCRAT LEISURE and SOLSTAD OFFSHORE
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ARISTOCRAT and SOLSTAD is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding ARISTOCRAT LEISURE and SOLSTAD OFFSHORE NK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOLSTAD OFFSHORE and ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE 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 has no effect on the direction of ARISTOCRAT LEISURE i.e., ARISTOCRAT LEISURE and SOLSTAD OFFSHORE go up and down completely randomly.
Pair Corralation between ARISTOCRAT LEISURE and SOLSTAD OFFSHORE
Assuming the 90 days trading horizon ARISTOCRAT LEISURE is expected to generate 1.61 times less return on investment than SOLSTAD OFFSHORE. But when comparing it to its historical volatility, ARISTOCRAT LEISURE is 3.78 times less risky than SOLSTAD OFFSHORE. It trades about 0.3 of its potential returns per unit of risk. SOLSTAD OFFSHORE NK is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 275.00 in SOLSTAD OFFSHORE NK on September 13, 2024 and sell it today you would earn a total of 58.00 from holding SOLSTAD OFFSHORE NK or generate 21.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.73% |
| Values | Daily Returns |
ARISTOCRAT LEISURE vs. SOLSTAD OFFSHORE NK
Performance |
| Timeline |
| ARISTOCRAT LEISURE |
| SOLSTAD OFFSHORE |
ARISTOCRAT LEISURE and SOLSTAD OFFSHORE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ARISTOCRAT LEISURE and SOLSTAD OFFSHORE
The main advantage of trading using opposite ARISTOCRAT LEISURE and SOLSTAD OFFSHORE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARISTOCRAT LEISURE 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.| ARISTOCRAT LEISURE vs. Apple Inc | ARISTOCRAT LEISURE vs. Apple Inc | ARISTOCRAT LEISURE vs. Apple Inc | ARISTOCRAT LEISURE vs. Apple Inc |
| SOLSTAD OFFSHORE vs. Superior Plus Corp | SOLSTAD OFFSHORE vs. SIVERS SEMICONDUCTORS AB | SOLSTAD OFFSHORE vs. CHINA HUARONG ENERHD 50 | SOLSTAD OFFSHORE vs. NORDIC HALIBUT AS |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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