Correlation Between Ao World and Solstad Offshore
Can any of the company-specific risk be diversified away by investing in both Ao World 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 Ao World and Solstad Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ao World and Solstad Offshore ASA, you can compare the effects of market volatilities on Ao World 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 Ao World with a short position of Solstad Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ao World and Solstad Offshore.
Diversification Opportunities for Ao World and Solstad Offshore
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Ao World and Solstad is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Ao World 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 Ao World 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 Ao World 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 Ao World i.e., Ao World and Solstad Offshore go up and down completely randomly.
Pair Corralation between Ao World and Solstad Offshore
Assuming the 90 days trading horizon Ao World is expected to generate 0.64 times more return on investment than Solstad Offshore. However, Ao World is 1.57 times less risky than Solstad Offshore. It trades about 0.07 of its potential returns per unit of risk. Solstad Offshore ASA is currently generating about 0.03 per unit of risk. If you would invest 5,240 in Ao World on September 13, 2024 and sell it today you would earn a total of 5,600 from holding Ao World or generate 106.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.0% |
| Values | Daily Returns |
Ao World vs. Solstad Offshore ASA
Performance |
| Timeline |
| Ao World |
| Solstad Offshore ASA |
Ao World and Solstad Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ao World and Solstad Offshore
The main advantage of trading using opposite Ao World and Solstad Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ao World 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.| Ao World vs. Solstad Offshore ASA | Ao World vs. Beeks Trading | Ao World vs. SBM Offshore NV | Ao World vs. Odyssean Investment Trust |
| Solstad Offshore vs. Take Two Interactive Software | Solstad Offshore vs. METALL ZUG AG | Solstad Offshore vs. Ross Stores | Solstad Offshore vs. Pfeiffer Vacuum Technology |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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