Correlation Between Awilco LNG and Solstad Offsho
Can any of the company-specific risk be diversified away by investing in both Awilco LNG and Solstad Offsho 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 Awilco LNG and Solstad Offsho into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Awilco LNG ASA and Solstad Offsho, you can compare the effects of market volatilities on Awilco LNG and Solstad Offsho 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 Awilco LNG with a short position of Solstad Offsho. Check out your portfolio center. Please also check ongoing floating volatility patterns of Awilco LNG and Solstad Offsho.
Diversification Opportunities for Awilco LNG and Solstad Offsho
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Awilco and Solstad is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Awilco LNG ASA and Solstad Offsho in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solstad Offsho and Awilco LNG 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 Awilco LNG ASA are associated (or correlated) with Solstad Offsho. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solstad Offsho has no effect on the direction of Awilco LNG i.e., Awilco LNG and Solstad Offsho go up and down completely randomly.
Pair Corralation between Awilco LNG and Solstad Offsho
Assuming the 90 days trading horizon Awilco LNG ASA is expected to under-perform the Solstad Offsho. In addition to that, Awilco LNG is 2.32 times more volatile than Solstad Offsho. It trades about -0.22 of its total potential returns per unit of risk. Solstad Offsho is currently generating about -0.27 per unit of volatility. If you would invest 3,976 in Solstad Offsho on December 4, 2024 and sell it today you would lose (424.00) from holding Solstad Offsho or give up 10.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Awilco LNG ASA vs. Solstad Offsho
Performance |
| Timeline |
| Awilco LNG ASA |
| Solstad Offsho |
Awilco LNG and Solstad Offsho Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Awilco LNG and Solstad Offsho
The main advantage of trading using opposite Awilco LNG and Solstad Offsho positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Awilco LNG position performs unexpectedly, Solstad Offsho 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 Offsho will offset losses from the drop in Solstad Offsho's long position.The idea behind Awilco LNG ASA and Solstad Offsho 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 Offsho vs. Havila Shipping ASA | Solstad Offsho vs. Prosafe SE | Solstad Offsho vs. Eidesvik Offshore ASA |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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