Correlation Between APPLIED MATERIALS and Solstad Offshore
Can any of the company-specific risk be diversified away by investing in both APPLIED MATERIALS 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 APPLIED MATERIALS and Solstad Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between APPLIED MATERIALS and Solstad Offshore ASA, you can compare the effects of market volatilities on APPLIED MATERIALS 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 APPLIED MATERIALS with a short position of Solstad Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of APPLIED MATERIALS and Solstad Offshore.
Diversification Opportunities for APPLIED MATERIALS and Solstad Offshore
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between APPLIED and Solstad is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding APPLIED MATERIALS 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 APPLIED MATERIALS 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 APPLIED MATERIALS 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 APPLIED MATERIALS i.e., APPLIED MATERIALS and Solstad Offshore go up and down completely randomly.
Pair Corralation between APPLIED MATERIALS and Solstad Offshore
Assuming the 90 days trading horizon APPLIED MATERIALS is expected to generate 1.79 times more return on investment than Solstad Offshore. However, APPLIED MATERIALS is 1.79 times more volatile than Solstad Offshore ASA. It trades about 0.13 of its potential returns per unit of risk. Solstad Offshore ASA is currently generating about 0.04 per unit of risk. If you would invest 15,968 in APPLIED MATERIALS on November 3, 2024 and sell it today you would earn a total of 1,404 from holding APPLIED MATERIALS or generate 8.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
APPLIED MATERIALS vs. Solstad Offshore ASA
Performance |
| Timeline |
| APPLIED MATERIALS |
| Solstad Offshore ASA |
APPLIED MATERIALS and Solstad Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with APPLIED MATERIALS and Solstad Offshore
The main advantage of trading using opposite APPLIED MATERIALS and Solstad Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if APPLIED MATERIALS 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.| APPLIED MATERIALS vs. SEKISUI CHEMICAL | APPLIED MATERIALS vs. China BlueChemical | APPLIED MATERIALS vs. Mitsubishi Gas Chemical | APPLIED MATERIALS vs. X FAB Silicon Foundries |
| Solstad Offshore vs. AP Mller | Solstad Offshore vs. AP Mller | Solstad Offshore vs. HAPAG LLOYD UNSPADR 12 | Solstad Offshore vs. ZIM Integrated Shipping |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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